On January 1, 2015 Schaepman company paid 210,000 in cash for 10% of the outstanding voting shares of Tholen company. At that date the book value of the net assets of Tholen was 1,700,000. Tholen held land that was undervalued by 100,000 on its accounting records. Assume that Schaepman doesnt have significant influence over Tholen.

For 2015 and 2016 the next financial figures are given for Tholen:

	2015	2016
Net income	240,000	270,000
Dividend declared and paid	90,000	120,000
Book value of net assets on December 31	1,850,000	2,000,000
Fair value of the company on December 31	Unknown	2,500,000

Question 1

If an investor doesnt have significant influence over an investment in equity securities, there are two possibilities for the classification of the investment. What is the name of those two classifications?

Question 2

If an investor doesnt have significant influence over an investment in equity securities, the investment can be recorded in the balance sheet of the investor at its original cost or at its fair value. In what situation the investor should apply the original cost and in what situation the fair value?

Question 3

For 2015 and 2016 give the journal entries that Schaepman should make to record the investment in Tholen and the Equity on income from Tholen. Do this for both of the classification methods mentioned in question 1.