Question
Hathaway Haulers Inc. acquired 25% of the outstanding shares of GMR Inc. on December 31, 2019. The purchase price was $1,250,000 for 62,500 shares and
Hathaway Haulers Inc. acquired 25% of the outstanding shares of GMR Inc. on December 31, 2019. The purchase price was $1,250,000 for 62,500 shares and is equal to 25% of GMRs carrying amount. GMR declared and paid a $0.75 per share cash dividend on June 15 and again on December 15, 2020. GMR reported net income of $520,000 for 2020. The fair value of GMRs shares was $21 per share at December 31, 2020. Hathaway Haulers is a public company and applies IFRS.
Prepare the journal entries for Hathaway Haulers Inc. for 2019 and 2020, assuming Hathaway cannot exercise significant influence over GMR. The investment is accounted for using FV-OCI model.
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