reg Ltd purchased 25% of the shares of Rowley Ltd on 1 January 20X2. This purchase resulted in Greg Ltd having significant influence over Rowley Ltd. The purchase did not give rise to any goodwill or bargain purchase gain for Greg. Additional information is provided below: For the year ended 31 December 20X2, Rowley Ltd reported profit of $200,000 and revalued its assets upwards by $80,000. In 20X2, Rowley Ltd paid total dividends of $80,000, all from profits made in 20X2. Dana Ltd is 60% owned by Greg Ltd and is Greg's subsidiary. During 20X2, Rowley sold $400,000 of inventory to Dana Ltd and made profit of $150,000. As at 31 December 20X2, 30% of the inventory were still held by Dana Ltd. It was assessed and determined that Greg's investment in Rowley was impaired by $2,000 in 20X2. Required: a) Prepare journal entries for Greg Ltd in 20X2 to account for the above events using the Equity method. Use the Reclassification method to account for the profit and dividends that Greg shares from Rowley. (12 marks) Reminder: no marks for workings/calculations. b) Explain how your answers to part a) would differ if the cost method was used instead. Hint