Question
Indigo Inc acquired 130,000 common shares, which is 25% of the outstanding common shares, of Tahiti...
Indigo Inc acquired 130,000 common shares, which is 25% of the
outstanding common shares, of Tahiti Ltd. on January 1, 2020 for
$767,000. At the time of purchase, Tahiti Ltd. depreciable assets
were undervalued by $32,200. The depreciable assets had a remaining
useful life of 5 years with no salvage value. Tahiti Ltd. declared
and paid a cash dividend of $0.30 per share on July 31, 2020.
Tahiti Ltd. reported $1.1 million as net income on December 31,
2020 for the year ending on this date. Assume that Indigo Inc. is
in a position to exercise significant influence over Tahiti Ltd,
and that Indigo follows IFRS.
Prepare all the journal entries for 2020 in the books of Indigo
Inc. relating to above transactions. (Credit account
titles are automatically indented when the amount is entered. Do
not indent manually. Record journal entries in the order presented
in the problem. If no entry is required, select "No Entry" for the
account titles and enter 0 for the
amounts.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
Jan. 1Jul. 31Dec. 31 |
|||
|
Jan. 1Jul. 31Dec. 31 |
|||
|
Jan. 1Jul. 31Dec. 31 |
|||
|
(To record investment income) |
|||
|
(To record amortization of fair value difference) |
Calculate the balance in Indigo’s “Investment in Tahiti: account at
December 31, 2020."
| Investment in Tahiti | $ |
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