Reference no: EM132762508

Panther Mining Inc. (Panther) is a publicly accountable mining company located in Toronto with global operations. Panther owns and operates several gold mines throughout South America. On January 1, 2020, Panther made a $25,000,000 investment in a gold mining company, Au-Gold Mining Corp. (AU) that gave Panther a 16% ownership interest in AU.

• As part of its investment in AU, three members of Panther's management team sit on AU's board of directors, which has a total of seven directors. Panther's management team is also involved in AU's strategic operations and decision-making. Panther's management team plans to be involved in AU's operations in order to take AU from a development-stage mining company to a production-stage mining company. In addition, Panther and AU share a CFO.
• Panther has recorded its investment in AU as an asset on its statement of financial position in the amount of $25,000,000 on January 1, 2020, and has made NO additional subsequent journal entries.

Problem 1: Identify and evaluate three of the factors in order to determine whether Panther has significant influence in AU. Conclude as to whether Panther has significant influence, with support.

Problem 2: Explain how the investment should be accounted for at the acquisition date and in Panther's December 31, 2020, year-end financial statements. Journal entries are NOT required.