XYZ Inc. purchased 33 percent of ABC Company's voting stock on January 1, 2014, for £4.7 million in cash. At the date of acquisition, ABC reported its total assets at £68 million and its total liabilities at £62 million. Investigation revealed that ABC's equipment (10-year life) was overvalued by £2.4 million and it had an unreported technology (3-year life) valued at £850,000. ABC declares and pays £170,000 in dividends and reports net income of £300,000 in 2021.

Required: Prepare the necessary journal entries on XYZ's books to report the above information for 2021 assuming XYZ uses the equity method to report its investment.