Equity Method and Eliminating Entries Three Years After Acquisition Puffin Industries acquired all of Sunset Coast Digital’s stock on January 1, 2018, for $5,000,000, $3,600,000 in excess of book value. At that time, Sunset Coast’s inventory (LIFO) was overvalued by $400,000 and its plant assets (10-year life) were overvalued by $500,000. Previously unreported identifiable intangible assets were valued at $1,000,000, and amortized over 5 years. Goodwill from this acquisition was impaired by $100,000 in 2019. Sunset Coast depreciates plant assets and amortizes intangibles by the straight-line method. During 2018 and 2019, Sunset Coast reported total net income of $850,000 and paid out 50 percent in dividends. Puffin carries its investment in Sunset Coast using the complete equity method. Sunset Coast’s inventory increased each year since it was acquired by Puffin, Sunset Coast’s reported net income for 2020 was $400,000, and dividends totaled 50 percent of reported income. a. Compute Puffin’s 2020 equity in net income of Sunset Coast. $Answer b. Compute the balance in the Investment in Sunset Coast account at December 31, 2020, after all equity method entries have been booked. $Answer