On December 31, 2019, Akron, Inc., purchased 5 percent of Zip Company's common shares on the open market in exchange for $15,600. On December 31, 2020, Akron, Inc., acquires an additional 25 percent of Zip Company's outstanding common stock for $97,000.
On December 31, 2019, Akron, Inc., purchased 5 percent of Zip Company's common shares on the open market in exchange for $15,600. On December 31, 2020, Akron, Inc., acquires an additional 25 percent of Zip Company's outstanding common stock for $97,000.
During the next two years, the following information is available for Zip Company:
| Income | Dividends Declared | Common Stock Fair Value (12/31) |
|
| 2019 | $312,000 | ||
| 2020 | $85,000 | $7,900 | 388,000 |
| 2021 | 94,000 | 16,000 | 487,000 |
At December 31, 2020, Zip reports a net book value of $298,000. Akron attributed any excess of its 30 percent share of Zip's fair over book value to its share of Zip's franchise agreements. The franchise agreements had a remaining life of 10 years at December 31, 2020.
Assume Akron applies the equity method to its Investment in Zip account:
What amount of equity income should Akron report for 2021?
On Akron’s December 31, 2021,
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