Charles Inc. purchased 30% of Nassar Corporation's 29,000 outstanding common shares at a cost of $ 15 per share on January 3, 2020. The purchase price of $ 15 per share was based solely on the book value of Nassar's net assets. On September 21, Nassar declared and paid a cash dividend of $ 37,800. On December 31, Charles's year end, Nassar reported net income of $ 82,000 for the year. Nassar shares had a fair value of $ 14.75 per share at December 31. Charles Inc., a private Canadian corporation, applies ASPE.
Instructions
Under the assumption that the 30% holding of Nassar does not give Charles significant influence over Nassar, identify the possible accounting methods Charles could use under ASPE to account for its investment. Prepare all required 2020 entries under each acceptable method.

Question

Quizplus · Accepted Answer

The Answer of Charles Inc. purchased 30% of Nassar Corporation's 29,000 outstanding common shares at a cost of $ 15 per share on January 3, 2020. The purchase price of $ 15 per share was based solely on the book value of Nassar's net assets. On September 21, Nassar declared and paid a cash dividend of $ 37,800. On December 31, Charles's year end, Nassar reported net income of $ 82,000 for the year. Nassar shares had a fair value of $ 14.75 per share at December 31. Charles Inc., a private Canadian corporation, applies ASPE.
Instructions
Under the assumption that the 30% holding of Nassar does not give Charles significant influence over Nassar, identify the possible accounting methods Charles could use under ASPE to account for its investment. Prepare all required 2020 entries under each acceptable method.