On January $1,2020$ Nashville Predators Corporation acquired a $40\%$ ownership interest in Stars Company

for $$575,000.$

The controller is now preparing his first set of financial statements since the acquisition and is unsure

about which method of reporting is most appropriate for the investment. He has come to you for advice.

REQUIRED:

A$)$ State under what conditions it would be appropriate for Nashville Predators to prepare

consolidated financial statements to report the investment in Stars. As part of your answer,

briefly describe the extent of influence implied by the use of consolidation and state $2$ factors that

might indicate that this extent of influence does exist. $(3$ marks$)$

B$)$ State under what conditions it would be appropriate for Nashville Predators to report the

investment in Stars using the equity method. As part of your answer, briefly describe the extent of

influence implied by the use of the equity method and state $2$ factors that might indicate that this

extent of influence does exist. $(3$ marks$)$

C$)$ State under what conditions it would be appropriate for Nashville Predators to report the

investment in Stars using proportionate consolidation $($Proprietary Theory$).$ As part of your

answer, identify the extent of influence implied by the use of proportionate consolidation. $(2$

marks$)$