In early January $2023,$ Martinez Inc., a private enterprise that applies ASPE, purchased $40\%$ of the common shares of Washi

Corp. for $$385,000.$ Martinez was now able to exercise considerable influence in decisions made by Washi's management.

Washi's statement of financial position reported the following information at the date of acquisition:

Additional information:

Both the carrying amount and fair value are the same for non$-$depreciable assets and for liabilities.

The fair value of the assets subject to depreciation is $$705,000.$

The company depreciates its capital assets on a straight$-$line basis.

Washi reported net income of $$153,000$ and declared and paid dividends of $$105,000$ in $2023.$In early January $2023,$ Martinez Inc., a private enterprise that applies ASPE, purchased $40\%$ of the common shares of Washi Assume the same facts as above and in part $($b$),$ except that Washi's net income included a loss on discontinued operations of

$$36,000($net of tax$).$ Prepare the journal entries necessary to record Martinez's equity in the net income of Washi for $2023.$

Ignore income taxes. $($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

Debit

Credit

Loss on Discontinued Operations

Investment Income or Loss

$($To record investment income and loss$)$

Investment Income or Loss

Investment in Associate

$($To record depreciation of fair value difference$)$

Corp. for $$385,000.$ Martinez was now able to exercise considerable influence in decisions made by Washi's management.

Washi's statement of financial position reported the following information at the date of acquisition:

Additional information:

Both the carrying amount and fair value are the same for non$-$depreciable assets and for liabilities.

The fair value of the assets subject to depreciation is $$705,000.$

The company depreciates its capital assets on a straight$-$line basis.

Washi reported net income of $$153,000$ and declared and paid dividends of $$105,000$ in $2023.$