Question: On January 1, Rook Corporation, a publicly traded company, purchased 25% of Hook Ltd. common shares for $800,000. At December 26, Hook declared a $40,000

On January 1, Rook Corporation, a publicly traded company, purchased 25% of Hook Ltd. common shares for $800,000. At December 26, Hook declared a $40,000 (Rook received its share that day) and reported net income of $80,000. The shares' fair value at December 31 was $840,000.
(a) Record each of these transactions, assuming Rook has significant influence over Hook and is using the equity method to account for this investment.
(b) How much income would be reported by Rook because of its investment in Hook?

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