BBB Corporation had 10,000 ordinary shares outstanding during the entire period. There is no public market for BBB Corporation.

AAA Company made the following acquisitions of BBB Corporation shares.

January 1, 2016 1,000 shares for $ 35 each share.

January 1, 2017 3,000 shares for $ 75 each share.

January 1, 2018 6,000 shares for $ 165 each share.

Ignore income taxes effects and opportunity costs of funds used to make these investments.

Required:

1. Compute the effects of these investments on BBB Companys reported sales, net income, and cash flows for 2016, and 2017.
2. Calculate the carrying value of AAA Companys investment in BBB Corporation as of 31 December 2016 and 31 December 2017.
3. Discuss how AAA Company accounts for its investment in BBB Company during 2018.

The following information is from the annual report of BBB Corporation: 2016 2017 2018 Salese 3 million 5 million 8 million Net income 500,000 900,000 1,950,000 Dividends paid 100,000 250,000 800,000 Book value per share (year-end) 75 140 255