Response to the following questions:
1. In accounting for investments in equity securities, when should the equity method be used?
2. Prepare Hoffman Company's journal entries to reflect the following transactions for the current year. May 7 Purchases 100 shares of Lov stock as a short-term investment in available-for-sale securities at a cost of $25 per share plus $200 in broker fees. June 6 Sells 100 shares of its investment in Lov stock at $28 per share. The broker's commission on this sale is $75.