In early January 2023, Flounder Inc., a private enterprise that applies ASPE, purchased 40% of the common shares of Washi Corp. for $361,000. Flounder was now able to exercise considerable influence in decisions made by Washi's management. Washi's statement of financial position reported the following information at the date of acquisition:
In early January 2023, Flounder Inc., a private enterprise that applies ASPE, purchased 40% of the common shares of Washi Corp. for $361,000. Flounder was now able to exercise considerable influence in decisions made by Washi's management. Washi's statement of financial position reported the following information at the date of acquisition:
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 18E
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Question
c. Assume the same facts as above and in part (b), except that Washi’s net income included a loss on discontinued operations of $33,000 (net of tax). Prepare the
Account Titles and Explanation
|
Debit
|
Credit
|
---|---|---|
enter an account title to record investment income and loss
|
enter a debit amount
|
enter a credit amount
|
enter an account title to record investment income and loss
|
enter a debit amount
|
enter a credit amount
|
enter an account title to record investment income and loss
|
enter a debit amount
|
enter a credit amount
|
(To record investment income and loss)
|
||
enter an account title to record
|
enter a debit amount
|
enter a credit amount
|
enter an account title to record depreciation of fair value difference
|
enter a debit amount
|
enter a credit amount
|
(To record depreciation of fair value difference)
|
![b. Assuming Flounder Inc applies the equity method to account for its investment in Washi,
prepare the journal entries to record Flounder Inc's equity in the net income and the receipt of
dividends from Washi Corp. in 2023.
Account Titles
Cash
Investment in Associate
(To record collection of dividend)
Investment In Associate
Investment Income or Loss
(To record investment income)
(To record depreciation of fair value difference)
Debit Credit](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F87fad0ee-75c5-4ca6-8c36-51ba51c6cde6%2F8a5f7b52-cbb2-4da3-8f8e-6c454dc272f0%2Fwjz23a_processed.png&w=3840&q=75)
Transcribed Image Text:b. Assuming Flounder Inc applies the equity method to account for its investment in Washi,
prepare the journal entries to record Flounder Inc's equity in the net income and the receipt of
dividends from Washi Corp. in 2023.
Account Titles
Cash
Investment in Associate
(To record collection of dividend)
Investment In Associate
Investment Income or Loss
(To record investment income)
(To record depreciation of fair value difference)
Debit Credit
![In early January 2023, Flounder Inc., a private enterprise that applies ASPE, purchased 40% of the common shares of Washi Corp. for
$361,000. Flounder was now able to exercise considerable influence in decisions made by Washi's management. Washi's statement of
financial position reported the following information at the date of acquisition:
Assets not subject to being amortized
Assets subject to depreciation (10 years average life remaining)
Liabilities
Additional information:
2.
3.
$180.000
1. Both the carrying amount and fair value are the same for non-depreciable assets and for liabilities.
The fair value of the assets subject to depreciation is $660,000.
The company depreciates its capital assets on a straight-line basis.
Washi reported net income of $143,000 and declared and paid dividends of $99,000 in 2023.
4.
546,000
101,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F87fad0ee-75c5-4ca6-8c36-51ba51c6cde6%2F8a5f7b52-cbb2-4da3-8f8e-6c454dc272f0%2Fdfd6sy_processed.png&w=3840&q=75)
Transcribed Image Text:In early January 2023, Flounder Inc., a private enterprise that applies ASPE, purchased 40% of the common shares of Washi Corp. for
$361,000. Flounder was now able to exercise considerable influence in decisions made by Washi's management. Washi's statement of
financial position reported the following information at the date of acquisition:
Assets not subject to being amortized
Assets subject to depreciation (10 years average life remaining)
Liabilities
Additional information:
2.
3.
$180.000
1. Both the carrying amount and fair value are the same for non-depreciable assets and for liabilities.
The fair value of the assets subject to depreciation is $660,000.
The company depreciates its capital assets on a straight-line basis.
Washi reported net income of $143,000 and declared and paid dividends of $99,000 in 2023.
4.
546,000
101,000
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