On July 1, 2018, Clearwater Inc. purchased 6,000 shares of the outstanding common stock of Mountain Corporation at a cost of $140,000. Mountain had 30,000 shares of outstanding common stock. The total book value and total fair value of Mountain's individual net assets on July 1, 2018, are both $700,000. The total fair value of the 30,000 shares of Mountain's common stock on December 31, 2018, is $760,000. Both companies have a January through December fiscal year. The following data pertains to Mountain Corporation during 2018: Dividends declared and paid, Jan. 1-Jun.

30 \quad \$ 12,000

Dividends declared and paid, Jul. 1-Dec.

31 \quad \$ 12,000

Net income, January 1 - June

30 \quad \$ 14,000

Net income, July 1 -December

31 \quad \$ 14,000

Required:
(1.) Prepare the necessary entries for 2018 under the equity method (other than for the purchase).
(2.) Prepare any necessary entries for 2018 (other than for the purchase) that would be required if the securities were accounted for under the fair value through net income method.

The Equity Method of Accounting for Investments in Voting Common

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