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!

January 1,2020, ABC elects to make a long-term investment and purchases 5,000 shares of Chris Company for $5.50 per share. This represents 25% of the voting shares and results in significant influence. The net income for XYZ in2020is $50,000. ABC declared and paid $5,000 in dividends on December 31,2020. In2021, ABC had an operating loss of $30,000 and no dividends were declared. In 2021, it was determined that goodwill was impaired by 20%.

ABC had the following assets and liabilities at cost and fair market value at January 1,2020:

	Cost	Market
Cash	15,000	15,000
Accounts Receivable	10,000	10,000
Inventory	10,000	8,000
Capital Assets, net	100,000	130,000
	135,000	163,000
Liabilities	69,500	69,500

Assume that the capital assets have 10 years of life remaining at January 1, 2020 and are amortized using the straight-line method.