On January 1, 2023, Novak Corporation, a public company following IFRS, acquired 15,900 of the 53,000 outstanding common shares of Noah Corp. for $22 per share. Noah's statement of financial position reported the following information at the date of the acquisition: Assets not subject to depreciation $289,800 Assets subject to depreciation Liabilities Additional information: 860,100 150,100 1. On the acquisition date, the fair value is the same as the carrying amount for the assets that are not subject to depreciation and for the liabilities. 2. 3. 4. On the acquisition date, the fair value of the assets that are subject to depreciation is $964,100. These assets had a remaining useful life of eight years at that time. Noah reported 2023 net income of $104,000 and paid dividends of $5,000 in December 2023. Noah's shares are not actively traded on the stock exchange, but Novak has determined that they have a fair value of $21 per share on December 31, 2023. (a) Your answer is partially correct. Prepare the journal entries for Novak for 2023, assuming that Novak cannot exercise significant influence over Noah and accounts for the investment at FV-OCI. (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. List all debit entries before credit entries.) Account Titles and Explanation FV-OCI Investments Cash (To record investment purchase) Cash Investment in Associate (To record dividend collected) FV-OCI Investments (To record fair value adjustment) Debit 349800 5000 104000 Credit 349800 5000 104000
On January 1, 2023, Novak Corporation, a public company following IFRS, acquired 15,900 of the 53,000 outstanding common shares of Noah Corp. for $22 per share. Noah's statement of financial position reported the following information at the date of the acquisition: Assets not subject to depreciation $289,800 Assets subject to depreciation Liabilities Additional information: 860,100 150,100 1. On the acquisition date, the fair value is the same as the carrying amount for the assets that are not subject to depreciation and for the liabilities. 2. 3. 4. On the acquisition date, the fair value of the assets that are subject to depreciation is $964,100. These assets had a remaining useful life of eight years at that time. Noah reported 2023 net income of $104,000 and paid dividends of $5,000 in December 2023. Noah's shares are not actively traded on the stock exchange, but Novak has determined that they have a fair value of $21 per share on December 31, 2023. (a) Your answer is partially correct. Prepare the journal entries for Novak for 2023, assuming that Novak cannot exercise significant influence over Noah and accounts for the investment at FV-OCI. (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. List all debit entries before credit entries.) Account Titles and Explanation FV-OCI Investments Cash (To record investment purchase) Cash Investment in Associate (To record dividend collected) FV-OCI Investments (To record fair value adjustment) Debit 349800 5000 104000 Credit 349800 5000 104000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2023, Novak Corporation, a public company following IFRS, acquired 15,900 of the 53,000 outstanding common shares
of Noah Corp. for $22 per share. Noah's statement of financial position reported the following information at the date of the
acquisition:
Assets not subject to depreciation
$289,800
Assets subject to depreciation
860,100
Liabilities
150,100
Additional information:
1.
On the acquisition date, the fair value is the same as the carrying amount for the assets that are not subject to depreciation
and for the liabilities.
2.
3.
4.
On the acquisition date, the fair value of the assets that are subject to depreciation is $964,100. These assets had a remaining
useful life of eight years at that time.
Noah reported 2023 net income of $104,000 and paid dividends of $5,000 in December 2023.
Noah's shares are not actively traded on the stock exchange, but Novak has determined that they have a fair value of $21 per
share on December 31, 2023.
(a)
Your answer is partially correct.
Prepare the journal entries for Novak for 2023, assuming that Novak cannot exercise significant influence over Noah and
accounts for the investment at FV-OCI. (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. List all debit entries before credit
entries.)
Account Titles and Explanation
FV-OCI Investments
Cash
(To record investment purchase)
Cash
Investment in Associate
(To record dividend collected)
FV-OCI Investments
(To record fair value adjustment)
Debit
349800
5000
104000
Credit
349800
5000
104000
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