Jadzia Inc. acquired 22% of the outstanding common shares of Ensign Inc. (Ensign) onDecember 31, 2022. The purchase price was $1,250,500 for 62,300 shares and is equal to22% of Ensign's carrying amount. Ensign declared and paid a $0.80 per share cashdividend on June 15 and again on December 15, 2023. Ensign reported net income of$523,250 for 2023. The fair value of Ensign's shares was $21 per share at December 31,2023. Jadzia Inc. is a public company and applies IFRS.InstructionsA. Prepare the journal entries for Jadzia Inc. for 2022 and 2023, assuming that Jadzia Inc.cannot exercise significant influence over Ensign. The investment is accounted for using theFV-OCI model. (10 marks)B. Prepare the journal entries for Jadzia Inc. for 2022 and 2023, assuming that Jadzia Inc.can exercise significant influence over Ensign. (10 marks)

Answered: Jadzia Inc. acquired 22% of the…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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Flint Inc. acquired 20% of the outstanding common shares of Gregson Inc. on December 31, 2022. The purchase price was $1.130,800 for 51,400 shares and is equal to 20% of Gregson's carrying amount. Gregson declared and paid a $0.70 per share cash dividend on June 15 and again on December 15, 2023. Gregson reported net income of $534,000 for 2023. The fair value of Gregson's shares was $23 per share at December 31, 2023. Flint is a public company and applies IFRS. (a) Prepare the journal entries for Flint for 2022 and 2023, assuming that Flint cannot exercise significant influence over Gregson. The investment is accounted for using the FV-OCI model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record entries in the order displayed in the problem statement. List all debit entries before credit entries.) Date Account Titles and Explanation…
Vaughn Joseph Inc. acquired 20% of the outstanding common stock of Theresa Carla Vista Inc. on December 31, 2025. The purchase price was $1,294,800 for 49,800 shares. Carla Vista Inc. declared and paid an $0.75 per share cash dividend on June 30 and on December 31, 2026. Carla Vista reported net income of $764,000 for 2026. The fair value of Carla Vista's stock was $29 per share at December 31, 2026. Assume that the security is a trading security. (a) Prepare the journal entries for Vaughn Joseph Inc. for 2025 and 2026, assuming that Joseph cannot exercise significant influence over Carla Vista. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit
Heidebrecht Design acquired 25% of the outstanding common stock of Sunland Company on January 1, 2022, by paying $854,000 for the 42,700 shares. Sunland declared and paid $0.30 per share cash dividends on March 15, June 15, September 15, and December 15, 2022. Sunland reported net income of $390,500 for the year. At December 31, 2022, the market price of Sunland common stock was $26 per share. (a) Prepare the journal entries for Heidebrecht Design for 2022 assuming Heidebrecht Design cannot exercise significant influence over Sunland. (Use the cost method.) (Record journal entries in the order presented in the problem. List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit
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Stellar Co. acquired 25% of the 500,000 shares of outstanding common stock of Overload Inc. on December 31, 2020. The purchase price was $3,550,000. Overload declared and paid $1.10 per share cash dividends on June 18, 2021, and on November 29, 2021. Overload reported net income of $1,200,000 for 2021. The fair value of Overload common stock was $28 per share at December 31, 2021. (a) Prepare the journal entries for Stellar Co. for 2021, assuming that Stellar cannot exercise significant influence over Overload. The securities should be classified as available-for-sale. (Credit account titles are automatically indented when amount is entered. Do not indent manually. 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 choose a transaction date enter an account title enter a debit amount…
At the beginning of 2022, CPA Company purchased 20% of ACCA Corp’s ordinary shares outstanding for P3,000,000. Transaction cost incurred is 10% of the purchase price of the shares. at the data of acquisition, the carrying amount of the identifiable net assets were equal to their fair values. During 2022, the investee reported net income of 3,500,000 and paid cash dividend of P2,000,000. In 2023, Oriental reported loss of P500,000 and issued 10% stock dividends a. Investment Income for 2022 b. Carrying Amount of the investment in Associate on December 31, 2022 c. Investment Loss in 2023?
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Potsaid Company acquired 30% of the outstanding common stock of Buyuk Inc. on December 31, 2025. The purchase price was $2,400,000 for 100,000 shares. Buyuk declared and paid a $4 per share cash dividend on June 30 and December 31, 2026. Buyuk reported net income of $1,460, 000 for 2026. The fair value of Buyuk's stock was $27 per share at December 31, 2026. INSTRUCTIONS a. Prepare the journal entries for Potsaid for 2025 and 2026, assuming that Potsaid cannot exercise significant influence over Buyuk. b. Prepare the journal entries for Potsaid for 2025 and 2026, assuming that Potsaid can exercise significant influence over Buyuk.
On January 1, 2021, AB Company purchased 15,000 shares of C Inc. for P25 per share. A total of P15,000 was incurred in relation to acquisition of these shares. These shares were acquired for short term fluctuation in profit. On July 31, 2021, 5,000 of these shares were sold at P30 per share. On October 31, 2021, a P4 per share dividend was declared to be distributed on January 31, 2022. And the remaining shares were quoted at P28 per share on December 31, 2021. How much is the total net amount reported in its profit or loss for the period ending December 31, 2021?

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