On January 1 , 2004, Woodrow Company purchased 30 percent of the outstanding common stock of Trevor Corporation at a total cost of $560,000. Management intends to hold the stock for the long term. On the December 31, 2004, balance sheet, the investment in Trevor Corporation was $720,000.

but no additional Trevor stock was purchased. The company received $80,000 in cash dividends from Trevor. The dividends were declared and paid during 2004. The company used the equity method to account for its investment in Trevor. The market price of Trevor stock increased during 2004 to a total value of $600,000.

Required: 1. Explain why the investment account balance increased from $560.(XX) to $720,000 during 2004. 2. What amount of revenue from the investment was reported during 2004? 3. If Woodrow used the market value method, what amount of revenue from the investment should have been reported in 2004? 4. If the market value method were used, what amount should be reported as the investment in Trevor Corporation on the December 3 1 , 2004. balance sheet?