Unit 7 Study Exercises.docx - Question 7.1 Grape...

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Question 7.1 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. Grape Share Acquisition % 25% Purchase Amount 800 Book Value of net Asset 2950 Intangible Assets 250 Useful life 20 years Annual Required 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.
Total 9.38 Cost 800 Share Income 12.5 Dividends -4.25 Depreciation Adj -3.13 Ending Balance 805.13 Purchase Amount 800 25% Total Value 3200 Book Value 2950 Intangible Assets- book Value 250

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