Question $2$

A$.$ On January $2,2022$ Maxi Company acquired $24,000$ shares $(20\backslash \%$ of Mini Company Stock$)$ at a cost of $\backslash (\backslash$$ $10\backslash )$ a share.

B$.$ For the year $2022($December $31,2022),$ Mini Company reported a net loss of $\backslash (\backslash$$ $100,000\backslash ).$

C$.$ At December $31,2022,$ the $24,000$ shares of Mini Company have a fair value $($market price$)$ of $\backslash (\backslash$$ $8\backslash )$ a share.

D$.$ On January $28,2023,$ Mini Company announced and paid a cash dividend of $\backslash (\backslash$$ $5,000\backslash ).$

E$.$ For the year $2023($December $31,2023),$ Mini reported a net income of $\backslash (\backslash$$ $25,000\backslash ).$

Part $($a$)$

$1.$ Prepare journal entries $($including necessary year$-$end adjustments$)$ for Maxi Company. Please show necessary computation.

Part $($b$)$

$1.$ When do we utilize the Equity Accounting Approach?

$2.$ What are the rules for the Equity Accounting Method?