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II. Denney and DBB Senior management at Denney Holdings Incorporated has tremendous faith that DBB Corporation will continue to grow and remain profitable for many years to come. Denney holds 90% of the bonds DBB has issued, along with 35% of the voting common stock DBB has issued. Denney even owns controlling interest (92%) in the bank that DBB engages to manage its day-to-day operations. DBB cannot issue any additional debt - current or long-term - without Denney's approval. Thus, Denney essentially controls DB8. The face value of the bonds issued by DBB is $100,000; the fair value is $105,000. The bonds pay 7% semiannually and mature in 16 years. All the DBB bonds Denney holds were issued at a premium. Denney has held them since the day they were issued, and Denney has no plans to sell them. Denney has held its DBB common stock for six years. DBB shares currently sell at $28 per share. The shares Denney holds are shown at $280,000 on the beginning-of-the-year balance sheet. Denney had net income of $40,000 during the year. This includes the interest revenue from DBB bonds. DBB had net income of $25,000. This is net of the interest expense paid on the bonds. Each company paid dividends of $4,000 during the year. Requirements: A) What method(s) must Denney use to account for its investment in DBB common stock? B) Prepare all necessary journal entries (if any) to record the stock-investment changes on Denney's books. C) Show the ending balance in the investment account (if any) on the Denney Holdings Incorporated Consolidated balance sheet

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