I am stuck on this question. Can you help me, please? Thanks in advance

On January 1^st of Year 1, a company acquired 40% of the Norton Company for $3,000,000. On the date of acquisition, the book value of Norton's net assets was reported at $6,500,000. Appraisal of Norton's net assets reflected the following:

• Plant and equipment is undervalued by $412,500.
• Inventory is undervalued by $375,000
• Land is undervalued by $100,000

All of Norton's long-term operating assets are depreciated or amortized using the straight-line method over a 15-year life. Norton uses the FIFO method to account for inventory.

The following information is provided on December 31^st of Year 1:

• Norton's net income is $$1,825,000
• Norton declared and paid dividends of $400,000
• The fair value of Norton's shares is $3,450,000

The entire investment is sold on January 1^st of Year 2.

REQUIRED:

Please Prepare all journal entries necessary if Randolph uses the equity method to account for its investment in Norton. Be sure to include the amount of goodwill on the acquisition.

Part II: (Independent of your answer to Part I)

Randolph elected the fair value option to account for investment in Norton (or another investor now holds 60% of Norton).

REQUIRED:

Please Prepare all journal entries necessary if Randolph uses the fair value method to account for its investment in Norton. This is the only equity security held by Randolph.