Problem $1-26($Algo$)($LO $1-2,1-4,1-5)$

On December $31,2019,$ Akron, Inc., purchased $5$ percent of Zip Company's common shares on the open market in

exchange for $$15,650.$ On December $31,2020,$ Akron, Inc., acquires an additional $25$ percent of Zip Company's

outstanding common stock for $$95,000.$

During the next two years, the following information is available for Zip Company:

At December $31,2020,$ Zip reports a net book value of $$280,000.$ Akron attributed any excess of its $30$ percent

share of Zip's fair over book value to its share of Zip's franchise agreements. The franchise agreements had a

remaining life of $10$ years at December $31,2020.$

a$.$ Assume Akron applies the equity method to its Investment in Zip account:

What amount of equity income should Akron report for $2021?$

On Akron's December $31,2021,$ balance sheet, what amount is reported for the Investment in Zip account?

b$.$ Assume Akron uses fair$-$value accounting for its Investment in Zip account:

What amount of income from its investment in Zip should Akron report for $2021?$

On Akron's December $31,2021,$ balance sheet, what amount is reported for the Investment in Zip account?