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Shan Shan Inc

Accounting

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Shan Shan Inc. acquired 20% of outstanding ordinary share of Cho Corporation on 31
December 2018. The purchase price was $ 125,000,000 for 50,000 shares. Cho Corp declared
and paid an $ 80 per share cash dividend on June 30 and on December 31 2019. Cho reported
net income of $ 73,000,000 for 2019. The fair value of Cho’s shares was $ 2,700 per share at
December 31 2019.
Instructions:
a. Prepare the journal entries for Shan Shan Inc. for 2018 and 2019, assuming that Shan
Shan cannot exercise significant influence over Cho. The investment should be
classified as trading
b. Prepare the journal entries for Shan Shan Inc. for 2018 and 2019, assuming that Shan
Shan can exercise significant influence over Cho
c. At what amount is the investment reported on the statement of financial position under
each of these methods at December 31, 2019? What is the total net income reported in
2019 under each of these methods?