Tinker Co. owns 25% of the common stock of Harbor Co. and uses the equity method to account for the investment. During 2018, Harbor reported income…

Tinker Co. owns 25% of the common stock of Harbor Co. and uses the equity method to account for the investment. During 2018, Harbor reported income of $120,000 and paid dividends of $40,000. Harbor owns a building with a useful life of twenty years, which was undervalued by $80,000 at the time that Tinker bought its shares of Harbor’s common stock.

Required:

Prepare a schedule to show the equity income Tinker should recognize for 2018 related to this investment.