Premier Inc. acquired a 42% interest in Jungle Vine Inc. (JV) for $86,000 cash on January 1, 2017 when JV had retained earnings of $100,000.

On purchase of the shares of JV, the acquisition differential schedule relating to Premier's share of JV was:

Equipment $10,000

Goodwill $35,000

$45,000

Equipment was expected to last five more years from date of acquisition and is still owned at year end. Goodwill was written down by $5,000 in 2018.

In 2019, Premier sold JV land, reporting a gain of $20,000. JV still has the land. In 2019, JV sold Premier inventory for $30,000 reporting a profit of $6,000. $15,000 of the inventory was still held by Premier at the end of 2019 and sold early in 2020.

In 2020, JV reported net income of $35,000 and declared and paid total dividends of $15,000. At December 31, 2020, JV had retained earnings of $160,000.

Premier uses the equity method to record the investment in JV. Tax rate is 25%.

Required: Show and label all calculations.

1) a) Calculate the Investment in JV value on the balance sheet of Premier at December 31, 2020.

b) Calculate the equity method income related to JV for 2020 reported by Premier.

2) If it was deemed INSTEAD that Premier had control over the investment as defined by IFRS since purchase of its interest in JV:

a) Explain in point form (3-5 individual points) how the accounting would change.

(ie. theoretically, no calculations or statements.)

b) Would Premier's net income for 2020 be higher or lower or the same? Explain and quantify.