Question

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

Julip 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 $3,600. Any excess of the cost of the investment over Julip'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 $12 and reported net income of $60 for its year ended December 31, 2017. Prepare Julip's 2017 entries to record all transactions and events related to the investment in its associate. Assume that Julip is a publicly accountable enterprise that applies IFRS.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution:

Journal entries in the books of Julip Corporation

Date Particulars Debit($) Credit($)
Jan 2 Julip Corporation Investments A/c Dr $925
Intangible asset A/c Dr $75
To Cash A/c $1,000
(To record investment made in Julip Corporation)
Bank A/c Dr $3
To Dividend Income A/c ($12*25%) $3
(To record dividend received on investment in Krov Corporation)
Dec 31 Krov Corporation investments A/c Dr $15
To Share of profit of associates A/c ($60*25%) $15
(To record to record investment value invrease by adjusting share of income in Krov Corporation)

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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...
On January 1, 2017, Cheyenne Co. purchased 25,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2017, Cheyenne Co. purchased 25,000 shares (a 10% interest) in Elton John Corp. for $1,520,000. At the time, the book value and the fair value of John’s net assets were $13,400,000. On July 1, 2018, Cheyenne paid $2,900,000 for 50,000 additional shares of John common stock, which represented a 20% investment in John. The fair value of John’s identifiable assets net of liabilities was equal to their carrying amount of $14,600,000. As a result of this transaction,...
Puta Company acquires 40% of the voting stock of Stanton Corporation for $8,000,000 on January 1,...
Puta Company acquires 40% of the voting stock of Stanton Corporation for $8,000,000 on January 1, 2016. At the time, the book value of Stanton was $15,000,000 and the excess paid over book value is attributed to previously unrecorded intangibles with an estimated remaining life of 10 years. Straight-line amortization is appropriate. During 2016, Stanton reported net income of $2,500,000 and paid dividends of $600,000. Both companies have December 31 year-ends, and there is no impairment of the investment. What...
1. In​ 2017, Gigajoule Corporation used the equity method to account for a​ 25% ownership interest...
1. In​ 2017, Gigajoule Corporation used the equity method to account for a​ 25% ownership interest in Megawatt Corporation. If Megawatt Corporation reports​ $400,000 of income and pays​ $80,000 of dividends in​ 2017, the net effect of the entries made by Gigajoule Corporation in 2017 will be​ to: A. reduce the Investment account by​ $320,000 B. increase the Investment account by​ $320,000 C. reduce the Investment account by​ $80,000 D. increase the Investment account by​ $80,000 2. Investments at fair...
On January 1, 2017, Donner Co. purchased 3,000 shares, representing 30% of Ishwar Limited, for $390,000....
On January 1, 2017, Donner Co. purchased 3,000 shares, representing 30% of Ishwar Limited, for $390,000. Donner is a publicly traded company. Ishwar's total net income was $86,000 for the year ended December 31, 2017. Ishwar also paid dividends in total of $25,000 during 2017. At the year end, each share of Ishwar was trading at $150 per share. Show the journal entries that Donner would have used to report its original purchase and any related investment income for Ishwar...
On January 1, 2020, Jordan Inc. purchased 25% of the outstanding common stock of Melody Corporation...
On January 1, 2020, Jordan Inc. purchased 25% of the outstanding common stock of Melody Corporation at a cost of $450,000. Melody Corporation had 400,000 shares of common stock outstanding. At the date of purchase, the book value of Melody’s net assets was $1,500,000. Book value and fair value of net assets were the same for all balance sheet items except for machinery and inventory. The fair value exceeded the book value by $100,000 for machinery and $20,000 for the...
Hamilton Ltd. was organized on January 2, 2017. The following investment transactions and events occurred during...
Hamilton Ltd. was organized on January 2, 2017. The following investment transactions and events occurred during the following months: 2017 Jan. 6 Hamilton paid $575,500 for 50,000 shares (20%) of Wong Inc. outstanding common shares. Apr. 30 Wong declared and paid a cash dividend of $1.10 per share. Dec. 31 Wong announced that its profit for 2017 was $480,000. Fair value of the shares was $11.80 per share. 2018 Oct. 15 Wong declared and paid a cash dividend of $0.70...
On January 1, 2020, Sweet Co. purchased 24,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2020, Sweet Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1,300,000. At the time, the book value and the fair value of John’s net assets were $12,900,000. On July 1, 2021, Sweet paid $2,890,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Sweet owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess...
On January 1, 2020, Sheridan Co. purchased 24,000 shares (a 10% interest) in Elton John Corp....
On January 1, 2020, Sheridan Co. purchased 24,000 shares (a 10% interest) in Elton John Corp. for $1,360,000. At the time, the book value and the fair value of John’s net assets were $13,400,000. On July 1, 2021, Sheridan paid $3,350,000 for 48,000 additional shares of John common stock, which represented a 20% investment in John. As a result of this transaction, Sheridan owns 30% of John and can exercise significant influence over John’s operating and financial policies. (Any excess...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star,...
On January 1, 2016, Pride Corporation purchased 90 percent of the outstanding voting shares of Star, Inc. for $456,000 cash. The acquisition-date fair value of the noncontrolling interest was $50,600. At January 1, 2016, Star’s net assets had a total carrying amount of $354,200. Equipment (eight-year remaining life) was undervalued on Star’s financial records by $51,200. Any remaining excess fair value over book value was attributed to a customer list developed by Star (four-year remaining life), but not recorded on...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT