Conroy Financial paid $530,000 for a 20% investment in the common stock of Maverick, Inc. For the first year, Maverick reported net income of $270,000, and at year-end declared and paid cash dividends of $115,000. On the balance-sheet date, the fair value of Conroy’s investment in Maverick stock was $410,000.

Requirements

1. Which method is appropriate for Conroy to use in its accounting for its investment in Maverick? Why?

2. Show everything that Conroy would report for the investment and any investment revenue in its year-end financial statements.