Situation:

On December $31,20$X$5,$ Pound Inc purchased $25\backslash \%$ of the shares of Sound Ltd$.$ for $\backslash$$$3,200,000.$ This provided Pound with significant influence over Sound. On this date, Sound had common shares of $\backslash$$$2,900,000$ and retained earnings of $\backslash$$$3,250,000.$ All assets and liabilities of Simkins were equal to their fair values with the following exceptions:

Sound's retained earnings balance at$.$ December $31,20$X$7,$ was $\backslash$$$3,850,000.$ None of Sound's land was sold in the two years after acquisition.

Following a valuation in $20$X$7$ of the goodwill resulting from the acquisition of the Sound shares, it was determined that goodwill was impaired by $\backslash (\backslash$$ $50,000\backslash ).$

Sound's net income for $20$X$6$ was $\backslash$$$775,000$ and the company paid out $\backslash$$$500,000$ in dividends.

Pound is following IFRS and management is very concerned about showing as high a net income as possible.

Required:

a$)$ Determine the allocation of the acquisition differential on the date of acquisition.

b$)$ Calculate the investment income in Sound for the years $20$X$6$ and $20$X$7,$ and prepare all journal entries that Pound would record relative to its investment in Sound for the $20$X$6$ and $20$X$7$ years. Assume the amortization of the FV increments is $\backslash$$$5,000$ for $20$X$6$ and $\backslash$$$15,000$ for $20$X$7.$

c$)$ Calculate the balance in the Investment in Sound account at December $31,20$X$7.$

d$)$ How should Pound report this investment if it is following ASPE? If options are available be sure to discuss the pros and cons of every option $($both for SFP presentation and income recognition$)$ before making a recommendation.