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Monty Corporation purchased a 25% interest in Krov Corporation on January 2, 2017, for $1,000. At...

Monty Corporation purchased a 25% interest in Krov Corporation on January 2, 2017, for $1,000. At that time, the carrying amount of Krov’s net assets was $3,460. Any excess of the cost of the investment over Monty’s share of Krov’s carrying amount can be attributed to unrecorded intangibles with a useful life of 20 years. Krov declared and paid a dividend of $16 and reported net income of $75 for its year ended December 31, 2017. Prepare Monty’s 2017 entries to record all transactions and events related to the investment in its associate. Assume that Monty is a publicly accountable enterprise that applies IFRS.

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Answer #1
Journal Entries in Books of Monty Corp.
Date Accounts Dr Amount Cr Amount
02-Jan-17 Investment in Equity of Krov Corp. Dr $        1,000
To Cash A/c $             1,000
(being 25% Stake purchased in Krov Corp.)
31-Dec-17 Cash A/c Dr $ 4
To Investment in Equity of Krov Corp $ 4
(being dividend received adjusted against Investment cost)
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