On January 1, 2020, Selected Limited purchased 120,000 common shares of Choices Ltd. for $24.50 per share. At the time, Choices had 600,000 shares outstanding. At the time of purchase, Choice's equipment was undervalued by $88,000 and had a remaining useful life of 11 years. Both companies have a December 31 year-end.On May 31, Senator declared and paid a cash dividend of $0.25 per share. On December 31, 2020, Choice reported a net income of $360,000. The shares in Choice were trading at $21.75 per share on that day.

A) Assume that the investment in Choice does not represent significant influence, and that Selected classifies the investment as FV-NI. Prepare the necessary journal entries on the books of Selected to record the above transactions.

B) Assume that the investment in Choice does represent significant influence. Prepare the necessary journal entries on the books of Selected Limited to record the above transactions. (5Marks)