Problem: Blithe Company purchased 60 percent of Spirit Company's stock for $100,000 on January 1, 2006 when Spirit reported $120,000 of common stock outstanding and retained earnings of $25,000. On December 31, 2008, Blithe reported its investment in Spirit at $126,100 using equity-method accounting for its investment. Blithe received dividends from Spirit totaling $15,000 over the three-year period. The purchase differential is amortized over 10 years.
Determine the amount of net income reported by Spirit over the three-year period.