Summary Her Company purchased 48,000 common shares (20%) of Him Inc. on January 1, Year 4, for $81

Her Company purchased 48Her Company purchased 48,000 common shares (20%) of Him Inc. on January 1, Year 4, for $816,000. Additional information on Him for the three years ending December 31, Year 6, is as follows: Year Net Income Dividends Paid Market Value per Share at December 31 Year 4 $480,000 $360,000 $18 Year 5 540,000 384,000 20 Year 6 576,000 420,000 23 On December 31, Year 6, Her sold its investment in Him for $1,104,000.Answer & ExplanationTo analyze Her Company's investment in Him Inc., we need to consider the equity method of accounting, as Her Company owns 20% of Him Inc. This method requires recognizing a share of the investee's net income and dividends received.Step-by-Step Analysis:1.Initial Investment:oOn January 1, Year 4, Her Company purchased 48,000 shares for $816,000.2.Equity Method Accounting:oUnder the equity method, Her Company will recognize its share (20%) of Him Inc.'s net income eac