Reference no: EM132783413

On January 1, 2018, Monroe, Inc., purchased 12,150 shares of Brown Company for $250,300, giving Monroe 9 percent ownership of Brown. On January 1, 2019, Monroe purchased an additional 29,700 shares for $590,000. This latest purchase gave Monroe the ability to apply significant influence over Brown. The original 9 percent investment was categorized as an available for-sale security. Any excess of cost over book value acquired for either investment was attributed solely to goodwill.

Brown reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years.

                        Net Income                     Cash Dividends
                          (Net Loss)                    (paid quarterly)

2018                   $276,000                        $168,000
2019                  264,000                            300,000
2020                  (132,000)                             100,000

Problem 1: On April 1, 2020, Monroe sells 5% ownership of Brown for $18 per share. Despite this sale, the company retains the ability to significantly influence Brown. Using the equity method what amounts appear on Monroe's 2020 income statement?