Equity Method: IAS 28 EXERCISE PREPARE THE JOURNAL ENTRIES and FILL IN THE BLANKS FOR THE FOLLOWING SITUATIONS: 1. Lion Inc. purchases 30% of Zombie Corp for P500,000. At the end of the year, Zombie Corp reports a net income of P100,000 and a dividend of P50,000 to its shareholders. When Lion makes the purchase, it records its investment under "Investments in Associates/Affiliates", a long-term asset account. The transaction is recorded at cost. 2. Lion receives dividends of (a) which is (b) _% of P50,000, and records a reduction in their investment account. The reason for this is that they have received money from their Investee. In other words, there is an outflow of cash from the investee, as reflected in the reduced investment account. 3. Finally, Lion records the net income from Zombie as an increase to its Investment account. The ending balance in their investments in Associates" account at year-end is (c) This represents a (d) Increase from their investment cost. This reconciles with their portion of Zombie's retained earnings. Zombie has Net Income of (e) which is reduced by the (1) dividend. Thus, Zombie's retained earnings for the year are (6) . Lion's portion of this dividends of (h). is )