On January 1, 2020 Paris Company acquired 25 percent of the common stock of Safir Corporation for $250,000, at underlying book value.

For the same year, Safir reported net income of $40,000. It paid $6,000 dividends during the year.

At December 31, 2020, Paris determined the fair value of the shares of Safir to be $243,000.

Required

a. Give all journal entries recorded by Paris with respect to the Investment in Safir assuming Paris uses equity method. (30 points)

b. Give all journal entries recorded by Paris with respect to the Investment in Safir assuming Paris carries securities at fair value method. (30 points)

c. What amount would Paris report as investment in Safir Corporation at the end of the year, if Paris used the equity method? (5 points)

d. What amount would Paris report as investment in Safir Corporation at the end of the year, if Paris used the fair value method? (5 points)