Holmes Inc. purchased 30% of Nadal Corporations 30,000 outstanding common shares at a cost of $15 per share on January 3, 2020. The purchase price of $15 per share was based solely on the book value of Nadals net assets. On September 21, Nadal declared and paid a cash dividend of $39,000. On December 31, Holmess year end, Nadal reported net income of $85,000 for the year. Nadal shares had a fair value of $14.75 per share at December 31. Holmes Inc., a private Canadian corporation, applies ASPE.

QUESTION:

Under the assumption that the 30% holding of Nadal does not give Holmes significant influence over Nadal, identify the possible accounting methods Holmes could use under ASPE to account for its investment. Prepare all required 2020 journal entries under each acceptable method.