Question 1 - Passive Investments

You are walking with your pet at The Lake when a fperson stranger approaches you and says, I have seen you in some advanced accounting classes at UVIC. Im also in accounting, but am having some trouble. Would you mind helping me with a few questions? You happily oblige.

a) The friendly stranger asks,

I work for ABC., a private corporation located in Victoria, BC. ABC. owns 5% of XYZ another privately-held corporation. We currently report under ASPE. How should Harry Inc. account for the investment in XYZ? Please provide me with all reporting alternatives.

b)The friendly stranger asks another question,

ABC. is considering going public, therefore would have to adopt IFRS. If they do adopt IFRS, will the reporting of the 5% investment in XYZ. change? Please let me know what the reporting alternatives will be.

c)The friendly stranger asks one final question,

ABC also has a 15% investment in Aspen Inc., but ABC is using the equity method. I thought that only investments with greater than 20% ownership could apply this method. How could this be possible? If this could be correct, please provide two examples of how this could be possible. Or, if this is definitely incorrect accounting, please let me know so that I can tell my boss!