Jerome Ltd purchased $25\%$ of the shares of Greg Ltd on $1$ January $20$X$2.$ This purchase resulted in Jerome Ltd having significant influence over Greg Ltd$.$ The purchase did not give rise to any goodwill or bargain purchase gain for Jerome.

Additional information is provided below:

$-$ For the year ended $31$ December $20$X$2,$ Rowley Ltd reported profit of $$120,000$ and revalued its assets upwards by $$60,000.$

$-$ In $20$X$2,$ Greg Ltd paid total dividends of $$40,000,$ all from profits made in $20$X$2$

$-$ George Ltd is $70\%$ owned by Jerome Ltd and is Jerome's subsidiary.

$-$ During $20$X$2,$ Greg sold $$400,000$ of inventory to Dana Ltd and made profit of $$150,000.$ As at $31$ December $20$X$2,30\%$ of the inventory were still held by George Ltd$.$

$-$ It was assessed and determined that Greg$$s investment in Greg was impaired by $$4,000$ in $20$X$2.$

Required:

a$)$ Prepare journal entries for Jerome Ltd in $20$X$2$ to account for the above events using the Equity method. Use the Reclassification method to account for the profit and dividends that Jerome shares from Greg

b$)$ Explain how your answers to part a$)$ would differ if the cost method was used instead. Hint: you can explain the similarities$/$same treatment for some