1. What is the amount of the unrealized gain or loss to be reported for the year?

Newman Corporation purchases an investment in Paul, Inc. at a purchase price of $6 million cash, representing 25% of the book value of Paul, Inc. Newman is an influential investor. During the year, Paul, Inc. reports net income of $700,000 and pays $120,000 of cash dividends. At the end of the year, the fair value of Newman's investment is $6.4 million