Required information Potter Corp.(Potter) acquired 200 voting common shares of Slade Ltd.'s (Slade) on January 1, 2021 for cash of $8,000. At all relevant times, Slade had 1,000 voting common shares issued and outstanding with a stated value of $10,000. On December 31, 2021, the shares were trading at $45 per share. The management of Potter classified this investment as fair value through profit or loss (FVTPL). On January 1, 2022, Potter acquired an additional 250 shares for cash of $12,500. This second purchase of shares was enough to give Potter significant influence over the key decision-making for Slade. Potter is using the equity method to account for its investment in Slade. Slade's book values approximated its fair values on the acquisition date with the exception of the company's patent, which was estimated to have a fair value that was $4,000 in excess of its recorded book value. The patent had a useful life of 20 years on acquisition date. Both companies use straight line amortization exclusively. On January 1, 2021, the shareholder's equity section of Slade was comprised of $10,000 in common shares and retained earnings of $15,000. On January 1, 2023, Potter acquired an additional 300 shares for cash of $16,500. Potter now has control over Slade. The entire acquisition differential was allocated to land. Slade's net income and dividends for 2021, 2022 and 2023 are as follows: Net Income Dividends 2021 $25,000 $10,000 2022 $18,000 $9,000 2023 $32,000 $14,000 at is the carrying amount of the investment in Slade account immediately after the share acquisition on January 1, 2022?
Required information Potter Corp.(Potter) acquired 200 voting common shares of Slade Ltd.'s (Slade) on January 1, 2021 for cash of $8,000. At all relevant times, Slade had 1,000 voting common shares issued and outstanding with a stated value of $10,000. On December 31, 2021, the shares were trading at $45 per share. The management of Potter classified this investment as fair value through profit or loss (FVTPL). On January 1, 2022, Potter acquired an additional 250 shares for cash of $12,500. This second purchase of shares was enough to give Potter significant influence over the key decision-making for Slade. Potter is using the equity method to account for its investment in Slade. Slade's book values approximated its fair values on the acquisition date with the exception of the company's patent, which was estimated to have a fair value that was $4,000 in excess of its recorded book value. The patent had a useful life of 20 years on acquisition date. Both companies use straight line amortization exclusively. On January 1, 2021, the shareholder's equity section of Slade was comprised of $10,000 in common shares and retained earnings of $15,000. On January 1, 2023, Potter acquired an additional 300 shares for cash of $16,500. Potter now has control over Slade. The entire acquisition differential was allocated to land. Slade's net income and dividends for 2021, 2022 and 2023 are as follows: Net Income Dividends 2021 $25,000 $10,000 2022 $18,000 $9,000 2023 $32,000 $14,000 at is the carrying amount of the investment in Slade account immediately after the share acquisition on January 1, 2022?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Required information
Potter Corp.(Potter) acquired 200 voting common shares of Slade Ltd.'s (Slade) on January 1, 2021 for cash of $8,000. At
all relevant times, Slade had 1,000 voting common shares issued and outstanding with a stated value of $10,000. On
December 31, 2021, the shares were trading at $45 per share. The management of Potter classified this investment as fair
value through profit or loss (FVTPL).
On January 1, 2022, Potter acquired an additional 250 shares for cash of $12,500. This second purchase of shares was
enough to give Potter significant influence over the key decision-making for Slade. Potter is using the equity method to
account for its investment in Slade. Slade's book values approximated its fair values on the acquisition date with the
exception of the company's patent, which was estimated to have a fair value that was $4,000 in excess of its recorded
book value. The patent had a useful life of 20 years on acquisition date. Both companies use straight line amortization
exclusively.
On January 1, 2021, the shareholder's equity section of Slade was comprised of $10,000 in common shares and retained
earnings of $15,000.
On January 1, 2023, Potter acquired an additional 300 shares for cash of $16,500. Potter now has control over Slade. The
entire acquisition differential was allocated to land.
Slade's net income and dividends for 2021, 2022 and 2023 are as follows:
Net Income
Dividends
2021
$25,000
$10,000
2022
$18,000
$9,000
2023
$32,000
$14,000
What is the carrying amount of the investment in Slade account immediately after the share acquisition on January 1, 2022?
Transcribed Image Text:Multiple Choice
O
O
O
$28,900
$22.500
$20,500
$21,500
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