Over the years, Duong has had a policy of investing idle cash in equity instruments of other companies. In particular, Duong has made periodic investments in the company's main supplier,Kune Industries Limited.

Although Duong currently owns 19% of the outstanding common shares of Kune, it does not yet have significant influence over the operations of this investee company. Duong accounts for its investment in Kune using FV-OCI without recycling through net income.

1. In 2022, Duong acquired shares of Yuan Inc.Corp. and Isha Electric Ltd. for short-term trading purposes(FV-NI). Duong purchased 100,000 shares of Yuan Inc.for $1.4 million,

and the shares currently have a fair value of $1.6 million. Duong's investment in Isha Electric has not been profitable: the company acquired 50,000 shares of Isha at $20 per share and they currently have a fair value of $720,000.

2. In 2021, Duong had invested $22.5 million in Kune Industries and, at December 31, 2021, the investment had a fair value of $21.5 million. While Duong did not sell or purchase any Kune shares in 2022,

Kune declared and paid a dividend totalling $2.4 million on all of its 2022 common shares, and reported 2022 net income of $13.8 million. Duong's 19% ownership of Kune Industries has a December 31, 2022 fair value of $22,225,000.

Instructions

a. Prepare the appropriate adjusting entries for Duong as at December 31, 2022 for each of the three investments

b. For both categories of investments, show how the results of the valuation adjustments made in part (a) would appear in Duong's 2022 I/S and B/S. Ignore income taxes.

c. Prepare the dividend and income adjusting entries for the 19% Kune investment, assuming that Duong's 19% interest results in significant influence over Kune's activities(Equity Method Accounting).