Solac Company Acquires 30% of the Voting Stock of Talgo

Solac Company acquires 30% of the voting stock of Talgo Corporation on January 1, 2019, for $15,000,000, which was 30% of Talgo's book value. It is now December 31, 2021. Solac sells merchandise to Talgo at a markup of 25% on cost. Talgo sells merchandise to Solac at a markup of 20% on cost. Below are the inventory balances held by Solac, purchased from Talgo, and held by Talgo, purchased from Solac, at various dates.
$$\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Inventory Held by Solac, } \\\text { Purchased from Talgo }\end{array} & \begin{array} { c } \text { Inventory Held by Talgo, } \\\text { Purchas ed From Solac }\end{array} \\\hline \text { December 31,2019 } & \$ 1,920,000 & \$ 750,000 \\\hline \text { December 31,2020 } & 3,000,000 & 1,000,000 \\\hline \text { December 31,2021 } & 3,120,000 & 1,025,000 \\\hline\end{array}$$ Talgo reports total net income of $2,800,000 for 2019 through 2020, and $1,600,000 for 2021. Talgo pays no dividends during this period.

Required a. Calculate equity in net income of Talgo, reported on Solac's 2021 income statement.
b. Calculate the Investment in Talgo balance, reported on Solac's December 31, 2021 balance sheet.