On April 2, 2020, enson Ltd. acquired 2,500 shares of Lam Corp. for $5o,000: ihts investment represents a 18% interest in Lam Corp. Jenson Ltd. has classified this investment as FVTLP. On October 31, 2020, Lam Corp. paid a $42,000 dividend to its shareholders. At March 31, 2021, Lam Corp.'s shares were valued at $15 per share and Lam Corp. reported net income of $145,000 for the year. On May 15, 2021, Jenson Ltd. sold the shares for $25,000. Both Jenson Ltd. and Lam Corp. have March 31, 2021 year-ends. Required:
On April 2, 2020, enson Ltd. acquired 2,500 shares of Lam Corp. for $5o,000: ihts investment represents a 18% interest in Lam Corp. Jenson Ltd. has classified this investment as FVTLP. On October 31, 2020, Lam Corp. paid a $42,000 dividend to its shareholders. At March 31, 2021, Lam Corp.'s shares were valued at $15 per share and Lam Corp. reported net income of $145,000 for the year. On May 15, 2021, Jenson Ltd. sold the shares for $25,000. Both Jenson Ltd. and Lam Corp. have March 31, 2021 year-ends. Required:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On April 2, 2020, enson Ltd. acquired 2,500 shares of Lam Corp. for $5o,000: ihts investment
represents a 18% interest in Lam Corp. Jenson Ltd. has classified this investment as FVTLP. On
October 31, 2020, Lam Corp. paid a $42,000 dividend to its shareholders. At March 31, 2021, Lam
Corp.'s shares were valued at $15 per share and Lam Corp. reported net income of $145,000 for
the year. On May 15, 2021, Jenson Ltd. sold the shares for $25,000. Both Jenson Ltd. and Lam
Corp. have March 31, 2021 year-ends.
Required:
Prepare dated journal entries for the investment on the acquiring company's books from
acquisition to disposal. Ignore income taxes.
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