On January 1, Year 5, Blake Corporation purchased 30% of the outstanding common shares of Stergis Limited for $2,100,000.

The following relates to Stergis since the acquisition date:

Year	Net Income	Other Comprehensive Income	Dividends Paid
Year 5	$ 58,800	$12,400	$84,000
Year 6	168,000	33,600	84,000

Required:

(a) Assume that Blake is a public company and the number of shares held by Blake is enough to give it significant influence over Stergis. Prepare all the journal entries that Blake should make regarding this investment in Year 5 and Year 6.

Date	General Journal	Debit	Credit
January 1, Year 5
	(Click to select) Investment in Stergis Cash Unrealized gain on FVTPL investment Equity method income Dividend income Net income Investment loss OCI - Equity method income
	(Click to select) Cash Dividend income Unrealized gain on FVTPL investment OCI - Equity method income Equity method income Net income Investment in Stergis Investment loss
	To record purchase of 30% of Stergis.
December 31, Year 5
	(Click to select) Investment loss Cash Unrealized gain on FVTPL investment Net income OCI - Equity method income Investment in Stergis Dividend income Equity method income
	(Click to select) Equity method income OCI - Equity method income Investment loss Unrealized gain on FVTPL investment Net income Cash Dividend income Investment in Stergis
	To record 30% of Stergiss Year 5 net income.
	(Click to select) Dividend income Net income Unrealized gain on FVTPL investment Cash OCI - Equity method income Investment loss Investment in Stergis Equity method income
	(Click to select) Equity method income Net income Dividend income OCI - Equity method income Unrealized gain on FVTPL investment Investment in Stergis Cash Investment loss
	To record 30% of Stergiss Year 5 OCI
	(Click to select) Cash Dividend income OCI - Equity method income Net income Investment loss Unrealized gain on FVTPL investment Equity method income Investment in Stergis
	(Click to select) Investment in Stergis Equity method income Cash Dividend income OCI - Equity method income
	To record 30% of Stergiss Year 5 dividends.
December 31, Year 6
	(Click to select) Net income Cash Investment in Stergis Investment loss Equity method income Dividend income Unrealized gain on FVTPL investment OCI - Equity method income
	(Click to select) Cash Unrealized gain on FVTPL investment Investment loss Dividend income Net income Investment in Stergis OCI - Equity method income Equity method income
	To record 30% of Stergiss Year 6 net income.
	(Click to select) Unrealized gain on FVTPL investment OCI - Equity method income Equity method income Investment in Stergis Net income Cash Investment loss Dividend income
	(Click to select) Net income Equity method income Investment loss Dividend income OCI - Equity method income Investment in Stergis Unrealized gain on FVTPL investment Cash
	To record 30% of Stergiss Year 6 OCI
	(Click to select) Equity method income Unrealized gain on FVTPL investment Investment in Stergis Net income Dividend income Investment loss Cash OCI - Equity method income
	(Click to select) Cash Investment in Stergis Net income Dividend income Investment loss OCI - Equity method income Equity method income Unrealized gain on FVTPL investment
	To record 30% of Stergiss Year 6 dividends.

(b) Assume that Blake is a private company. Even though it has significant influence, it chose to use the cost method to account for its investment. Prepare all the journal entries that Blake should make regarding this investment in Year 5 and Year 6.

Date	General Journal	Debit	Credit
January 1, Year 5
	(Click to select) Equity method income Net income OCI - Equity method income Investment loss Cash Investment in Stergis Dividend income Unrealized gain on FVTPL investment
	(Click to select) Unrealized gain on FVTPL investment OCI - Equity method income Cash Investment in Stergis Investment loss Net income Equity method income Dividend income
	To record purchase of 30% of Stergis.
December 31, Year 5
	(Click to select) Dividend income Net income Investment loss Cash OCI - Equity method income Unrealized gain on FVTPL investment Equity method income Investment in Stergis
	(Click to select) Unrealized gain on FVTPL investment Equity method income Net income Investment loss OCI - Equity method income Dividend income Cash Investment in Stergis
	To record 30% of Stergiss Year 5 dividends*
December 31, Year 6
	(Click to select) Unrealized gain on FVTPL investment OCI - Equity method income Investment in Stergis Investment loss Cash Equity method income Net income Dividend income
	(Click to select) Dividend income Cash Net income OCI - Equity method income Investment loss Investment in Stergis Equity method income Unrealized gain on FVTPL investment
	To record 30% of Stergiss Year 6 dividends.