Tinker Co. owns 25% of the common stock of Harbor Co. and uses the equity method to account for the investment. During 2021, Harbor reported income of $120,000 and paid dividends of $40,000. Harbor owns a building with a useful life of twenty years, which was undervalued by $80,000 at the time that Tinker bought its shares of Harbor's common stock.Required:Prepare a schedule to show the equity income Tinker should recognize for 2021 related to this investment.

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The Answer of Tinker Co. owns 25% of the common stock of Harbor Co. and uses the equity method to account for the investment. During 2021, Harbor reported income of $120,000 and paid dividends of $40,000. Harbor owns a building with a useful life of twenty years, which was undervalued by $80,000 at the time that Tinker bought its shares of Harbor's common stock.Required:Prepare a schedule to show the equity income Tinker should recognize for 2021 related to this investment.

Tinker Co Owns 25% of the Common Stock of Harbor Co