Stober Company purchases an investment in Lang Company at a purchase price of $1 million cash,representing 30% of the outstanding stock and book value of Lang. During the year, Lang reports net income of $100,000 and pays cash dividends of $40,000. At the end of the year, the fair value of Stober's investment is $1.2 million.

a. At what amount is the investment reported on Stober's balance sheet at year-end?

b. What amount of income from investments does Stober report? Explain.

c. Stober's $200,000 unrealized gain in investment fair value (choose one and explain):

(1) Is not reflected on either its income statement or balance sheet.

(2) Is reported in its current income.

(3) Is reported on its balance sheet only.

(4) Is reported in its other comprehensive income.

d. Prepare journal entries to record the transactions and events above.

e. Post the journal entries from d to their respective T-accounts.

f. Record each of the transactions from d in the financial statement effects template.