QUESTION 3- Equity Method 10 MARKS On 1 July 2015, Cairns Ltd purchased 40% of the shares of Mossman Ltd at a cost of $220,000. Cairns Ltd does not control Mossman Ltd but has established significant influence over Mossman Ltd. The carrying amounts of Mossman Ltd's net assets equal their fair value at date of acquisition. The relevant equity balances for Mossman Ltd are as follows: Equity 1/7/2015 30/6/2016 30/6/2017 430,000 Issued capital 430,000 430,000 Revaluation surplus Retained earnings 10,000 10,000 12,000 110,000 310,000 360,000 Additional Information: (a) On 30 July 2015, Mossman Ltd paid a final dividend of $60,000 from profits that existed at date of acquisition (b) On 10 June 2017, Mossman Ltd paid a final dividend of $80,000 from current period profits (c) For the financial year ended 30 June 2017, Mossman Ltd made a profit after tax of $130,000 (d) On 30 June 2017, Mossman Ltd recognised a net revaluation surplus of $2,000 relating to the revaluation of land. Cairns Ltd is not a parent entity (e) Required: In accordance with the requirements of AASB 128 Investment in Associates and Joint Ventures A. Prepare the jounal entries required by Cairns Ltd relating to its Investment in Mossman Ltd and subsequent transactions for the period from 1 July 2015 to 30 June 2017. Dates should be specified (6 marks) . Show the journal entry and explain how Cairns Ltd would record the Investment in Mossman Ltd under the Equity method as at 1 July 2015 if the purchase consideration had been $240,000. (2 marks) . Show the journal entry and explain how Cairns Ltd would record the Investment in Mossman Ltd under the Equity method as at 1 July 2015 if the purchase consideration had been $190,000 (2 marks)