Grape Corporation purchases a 25% interest in Orange Corporation on January 2, 2018, for $800. At
that time, the carrying amount of Orange’s net assets was $2,950. Any excess of the cost of the
investment over Grape’s share of Orange’s carrying amount can be attributed to unrecorded
intangibles with a useful life of 20 years. Orange declared and paid a dividend of $17 on October 20,
2018 and reported net income of $50 for its year ended December 31, 2018.
Book Value of net Asset
1. Prepare Grape’s 2018 entries to record all transactions and events related to the investment in its
associate. Assume Grape is a publicly accountable enterprise that applies IFRS.