Jones Company owns 25% of Jason Company (both fictitious companies) and appropriately applies the equity method of accounting. Amortization of excess purchase price, related to undervalued assets at the time of the investment, is €8,000 per year. During 2011 Jones sold €96,000 of inventory to Jason for €160,000. Jason resold €120,000 of this inventory during 2011. The remainder was sold in 2012. Jason reports income from its operations of €800,000 in 2011 and €820,000 in 2012.

1. Calculate the equity income to be reported as a line item on Jones’s 2011 income statement.

2. Calculate the equity income to be reported as a line item on Jones’s 2012 income statement.