On March 20, 2018, Reeder Company acquired 40,000 shares of Needed Industries common stock at $64 per share as a long-term investment. Needed has 100,000 shares of outstanding voting common stock. The following additional information is presented for the calendar year ended December 31, 2018: Nov. 15 Reeder received a cash dividend of $3.00 per share from Needed Industries. Dec. 31 Needed announced earnings for the year of $250,000. Dec. 31 Needed Industries common stock had a closing market price of $56 per share. 2019: Jan. 6 Reeder sold a quarter of its shares of Needed Industries at a price of $70 per share. Required: 1. What accounting method should be used by Reeder Company to account for this investment? Why? 2. Prepare journal entries for the transactions and events described.

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A: Following is the answer to given question

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Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.