Question 2: Equity Investment and Inventory (15 marks) Part One: On October 1, 2017 Dairfax Financial Holdings made a bid to take-over Blueberry. The price of Blueberry shares at that point in time was $8. Due to insufficient capital, the deal did not close. On December 31, 2017 Dairfax instead chose to purchase 20% of the company at fair market value. Blueberry information as of December 31, 2017 - Share price: $12 - # of shares outstanding: 560,000,000 Required: Using the equity method, record the journal entry for Dairfax's purchase on December 31, 2017. Part Two: It is now December 31, 2018 and Blueberry completes an inventory count. All inventory is valued at their retail prices. The breakdown of product inventory is below: Product Q10 Retail Inventory Value $750M $525M $150M Z10 Q10 Discount Markup (or discount) 150% (of cost) 100% (of cost) 40% discount off of normal Q10 retail price Required: Assume that Blueberry uses retail inventory method. Please use the tables below to calculate ending inventory on December 31, 2018. Product Retail Inventory Value Cost to Retail Ratio Ending Inventory (at cost) Q10 Z10 Q10 Discount Total