Writing Assignment #1 Chapter 1 As the text explains, you as a CFO may elect to use the fair value method of investment accounting when you are unable to exercise significant influence:.. On January 1st, Terrier Corporation purchases, for cash, 20,000 shares of Hinsdale Company for $50 per share. This price is the current stock price of Hinsdale Company. For the next 3 years, assume the following operations for Hinsdale: Year 1 Year 2 Year 3 Per Share Per Share Per Share Dividends 1.50 1.55 $ 1.60 Earnings 2.50 $ 2.70 2.40 Stock price 52.00 54.00 46.00 Required: Everything is to be completed within this document. 1. Prepare the applicable journal entries for each year to record Hinsdale's activity assuming that Terrier uses the fair value method to account for its investment in Hinsdale 2. Prepare the applicable journal entries for each year to record Hinsdale's activity assuming that Terrier uses the equity method to account for its investment in Hinsdale. 3. Write a memo to Sue Smith, the CEO of Terrier Corp. In that memo, compare, contrast, and evaluate the differences in the two accounting methods. Your response should include balance sheet and income statement impact, as well as any other relevant observations. In the memo, describe which method you prefer and why? The memo should be written in a professional manner. Remember, you are writing a memo to the CEO! Have an appropriate introduction and conclusion. I have included an example of a professional memo in the course resources section in Moodle, in addition to tips for effective business writing.The rubric for this assignment is located in the course resources section of Moodle. 1. Journal entries - Fair Value method Date Account Titles Debit Credit Yr1 Initial Investment1. Journal entries - Fair Value method Account Titles Initial Investment = & o Fair Value Adjustment Net Income Dividends Fair Value Adjustment Fair Value Adjustment = i N 2. Journal Entries - Equity Method Account Titles Initial Investment Net Income Dividends Fair Value Adjustment Net Income Dividends Fair Value Adjustment Net Income Dividends Fair Value Adjustment Fair Value Adjustment 2. Journal Entries - Equity Method Date Account Titles Debit Credit Yr1 Initial Investment Net Income Dividends Fair Value Adjustment YR2 Net Income Dividends Fair Value Adjustment YR3 Net Income Dividends Fair Value Adjustment 3. Memo