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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.

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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)

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