$*$P$21\mathrm{.}12$B $($LO $5)($Change from Fair Value to Equity Method$)$ On January $2,2024,$ Hudson Com$-$

pany purchased for $$600,000$ cash a $10\%$ interest in Lawrence Corp. On that date, the net assets of

Lawrence had a book value of $$4,500,000.$ The excess of cost over the underlying equity in net assets

is attributable to undervalued depreciable assets having a remaining life of $10$ years from the date of

Hudson's purchase.

The fair value of Hudson's investment in Lawrence securities is as follows: December $31,2024,$

$$620,000,$ and December $31,2025,$ $$660,000.$

On January $3,2026,$ Hudson purchased an additional $30\%$ of Lawrence's stock for $$2,240,000$ cash

when the book value of Lawrence's net assets was $$5,650,000.$ The excess was attributable to deprecia$-$

ble assets having a remaining life of $8$ years.

During $2024,2025,$ and $2026,$ the following occurred:

Instructions

On the books of Hudson Company, prepare all journal entries in $2024,2025,$ and $2026$ that relate to its

investment in Lawrence Corp., reflecting the data above and a change from the fair value method to the

equity method.