Pine Ltd. had the following transactions in the shares of Sap Ltd.:

The income of Sap Ltd. is earned evenly over the year.

Pine purchased its shares in Sap at their market values on January 1, 20X3, and 20X4, respectively. Any excess of purchase price over carrying value is attributable solely to goodwill. The annual tests for goodwill impairment have indicated no impairment of goodwill since the date of acquisition. The market value of each share of Sap Ltd. on December 31, 20X4, was $3.25. There was no change in the share price between December 31, 20X3, and January 1, 20X4.

Sap Ltd. has 100,000 shares outstanding.

Required
How should Pine report its investment in Sap for 20X3 and 20X4, assuming no dividend, and using the cost, fair value, and equity methods?

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Equity December 31 Equity Goodwill January 1 Year Date Cost January 1 January 1 *Of Sap Ltd.'s shares. $ 70,000 110,000 $150,000 $220,000 $25,000 33,000 20X3 30% 20X4 35% 220,000 300,000