Apenhuizen acquires 20 percent of the outstanding voting shares of Bergweide on January 1, 2019, for 210,000 and applies the equity method in accounting for this investment. Bergweide has a book value of 900,000 at January 1, 2019, and records net income of 210,000 during 2019 and 230,000 in 2020. Bergweide declared and paid dividends of 100,000 in each of these years.

On the acquisition date the book values of Bergweides asset and liability accounts are considered as equal to fair values except for a copyright whose value accounted for Apenhuizens excess cost in the acquisition. The copyright had a remaining life of 15 years at January 1, 2019.

Question 1 (3p)

Does Apenhuizen have to demonstrate in its financial statements why it is applying the equity method for its investment in Bergweide? Explain your answer.