In the board of directors' meeting on 1 June 2019, the chief executive officer (CEO) of Papaya Limited reported that there was a surplus cash of $10 million as at 31 March 2019. It was proposed that the surplus cash could be used for investment purposes. The CEO also mentioned that Papaya Limited had been approached by Pineapple Limited and Pumpkin Limited to set up a new company, Strawberry Limited. The total number of shares in Strawberry Limited would be 2,000,000, at a fair value of $1 per share. There would be six members on the board of directors which would be responsible for governing the business operations of Strawberry Limited. Below is the information about the ownership and composition of the board of directors in Strawberry Limited: Ownership and voting shares % 40% Pineapple Limited Pumpkin Limited Papaya Limited Number of directors on board can appoint 2 members can appoint 2 members can appoint 2 members 40% 20% A contractual agreement between Pineapple Limited, Pumpkin Limited, and Papaya Limited stated that Papaya Limited would be given the options to purchase shares of Strawberry Limited at any time at $0.1 each. If these options were to be exercised, Papaya Limited would be able to increase its equity interest as well as voting rights in Strawberry Limited to 51% while the equity interests of Pineapple Limited and Pumpkin Limited would be reduced to 24.5% and 24.5%, respectively. During the meeting, the directors of Papaya Limited were not sure how the investment in Strawberry Limited would be classified in the financial statements. The directors proposed to discuss the accounting issues relating to this investment in the next board meeting. If Papaya Limited decides to set up Strawberry Limited, with reference to the relevant financial reporting standards, advise Papaya Limited on the appropriate accounting treatments for Strawberry Limited