Question 1 On April 1, 20X1, Alpha Inc. acquired 500,000 shares, representing 25% of the outstanding shares of Omega Corp at a price of $2 per share plus transaction costs of $10,000. The acquisition provided Alpha Inc. significant influence over Omega Corp. At this date, Omega Corp's assets and liabilities equaled book values except for inventory, which was overstated by $40,000 and equipment, which was understated by $100,000. Omega's shareholders' equity consisted of common shares, $1,300,000 and retained earnings. 2,450,000. On July 31, 20X1, Omega Corp declared and paid a dividend of $1.20 per share. Omega Corp's net income for 20X1 was $2,850,000, and was earned evenly during the year. Assume that the Omega's inventory from April 1 was sold by the year-end and that its equipment had a remaining life of 5 years on the date of acquisition. On March 31, 20X2, Alpha sold a patent with a book value of $65,000 to Omega for $125,000. The patent had a remaining life of 4.5 years at the date of sale. On July 31, 20X2, Omega Corp declared and paid a dividend of $1.30 per share. Omega Corp's net income for 20X1 was $3,050,000, and was earned evenly during the year. The income tax rate is 20% for both companies. Required: a) Assume that both Alpha and Omega prepare financial statements according to ASPE. Determine how Alpha should report its investment in Omega Corp. Provide specific references from the Handbook to support your recommendation. Discuss any choices that may be available. by Assume that Alpha prepares its financial statements according to IFRS and decides to account for its investment in Omega under the equity method. Prepare the journal entries it would record for the years 20X1 and 20X2. Show supporting calculations.