Presented below are two independent situations.

1. Chicory Cosmetics acquired 15% of the 200,000 ordinary shares of Racine Fashion at a total cost of €13 per share on March 18, 2025. On June 30, Racine declared and paid a €60,000 dividend. On December 31, Racine reported net income of €122,000 for the year. At December 31, the market price of Racine Fashion was €15 per share. The shares are classified as nontrading.

2. Frank Ltd. obtained significant influence over Nowak Industries by buying 30% of Nowak’s 30,000 outstanding ordinary shares at a total cost of €9 per share on January 1, 2025. On June 15, Nowak declared and paid a cash dividend of €30,000. On December 31, Nowak reported a net income of €80,000 for the year.

Instructions 

Prepare all the necessary journal entries for 2025 for

(a) Chicory Cosmetics and

(b) Frank Ltd.

Understand the usefulness of consolidated statements.