Major Inc. acquired 20,000 common shares (20%) of Minor Ltd on January 1, Year 3 for $250,000. It was determined that Major Inc. obtained significant influence over the operating, investing and

financing decision of Minor Ltd. It was determined that the carrying value of Minor Ltd.'s net asset was equal to the fair value. Major Inc. has prepared the following Statement of Income for the fiscal year ending Dec 31, Year 3 before including any investment income from Minor Ltd.: Sales Cost of goods sold Gross profit Major Inc. Statement of Income For the year ended December 31, Year 3 General and administrative expenses Depreciation expense Other income Other loss Net Income 945,900 (388,490) 557,410 (156,880) (85,600) 185,600 (18,000) (74,880) 482,530 During Year 3, Minor Ltd paid dividends of $60,000 and reported net income of $234,300. As of Dec 31, Year 3, Minor Ltd.'s share was trading at $3.30 per share./nDuring Year 3, Minor Ltd paid dividends of $60,000 and reported net income of $234,300. As of Dec 31, Year 3, Minor Ltd.'s share was trading at $3.30 per share. Required 1 Assuming Major Inc. prepared its financial statements in accordance with IFRS, what method Major Inc. is required to account the investment in Minor Ltd.? (1 mark); and perform the following: . . . Prepare all journal entries necessary to account investment in Minor Ltd. for Year 3 (5 marks); Determine the correct balance in investment in Minor Ltd for Year 3 (1 mark); and Prepare a revised statement of income for Major after accounting the investment income from Minor. (2 mark) Required 2 Repeat the required (1) but assuming Major Inc. prepared its financial statements in accordance with ASPE and it accounts the investment in Minor Ltd. using cost method (6 marks). BERDACK