On May 20, 2017, Montero Co. paid $1,000,000 to acquire 25,000 common shares (10%) of ORD Corp. as a long-term investment. On August 5, 2018, Montero sold one-half of these shares for $625,000.
1. What valuation method should be used to account for this stock investment?
- Fair value method
- Equity method
2. Prepare entries to record both the acquisition and the sale of these shares.