Question 3 (18 marks) On January 1, 2021, Samantha Company (Samantha) purchased 66,000 shares of Teresa Limited (Teresa)'s ordinary share (30% shareholdings) for $924,000. This purchase gave Samantha the ability to exercise significant influence over Teresa. At the acquisition date, the equity of Teresa consisted of Share Capital (220,000 shares, $1 par) $220,000 Share Premium $1,650,000 Retained Earnings $710,000 Samantha recorded the investment in the 'Investment in Teresa' account in its book and used the equity method to account for such investment. On January 1, 2021, the carrying amount of Teresa's net assets equaled $2,580,000. Their book value was equal to their fair value except for the following. Carrying Amount Fair Value Remarks Intangible Asset (with cost $320,000) $ 240,000 $ 270,000 This intangible asset can be used for a further 6 years (a) Determine the implicit goodwill included in the investment in Teresa on January 1, 2021. During 2021, Samantha sold inventories to Teresa at a total price of $196,000, including a markup of 40%. 75% of the inventories were resold to third parties in 2021 and the remaining in 2022. During 2022, Samantha sold inventories to Teresa at a total price of $260,000, inclusive of a markup of 30%. 70% of the inventories were resold to third parties during 2022. The following information is available for Teresa from 2021 to 2022 Year Net Income ($) Dividends ($) Retained Earnings (at December 31) ($) Share Price (at December 31) ($/share) 2021 2022 234,000 210,000 66,000 88,000 878,000 1,000,000 14.7 15.2 (b) Prepare necessary journal entries prepared by Samantha for 2021 concerning its investment in Teresa. (c) Show how Samantha's investment is reported in its financial statements for the year ended on December 31, 2022.