Open 6 7 130% Tools Fill & Sign Comment Question 7: Investment in Associate with significant influence (11 mar Click on Tools to convert files to PDF. On January 3, 2016, Mego Ltd. Purchased 3,230 shares (32%) of the common shares of Block Corp for $488,920. The following information is provided about the identifiable assets and liabilities of Block at the date of acquisition: Carrying Amount $ 544,000 830,000 Fair Value $ 544,000 940,000 Assets not subject to depreciation Assets subject to depreciation (10 years remaining) Total identifiable assets Liabilities 1,374,000 93,000 1,484,000 93,000 During 2016, Block reported the following information on its statement of comprehensive income: Income before discontinued operations Discontinued operations (net of tax) Net income and comprehensive income Dividends declared and paid by Block, November 15, 2016 $237,000 (73,400) 163,600 110,000 Assume that the 32% interest is sufficient to make Block an associate of Mego, and that Mego is required to apply IFRS for its financial reporting. The fair value of Block's shares at December 31, 2016 is $155 per share. Required: a) Prepare the journal entry to record the purchase of the Block shares on January 3, 2016. b) Prepare all the necessary journal entries with Mego's investment in Block for 2016. Depreciable assets are depreciated on a straight-line basis (hint: dividend income fair Open 6 7 130% Tools Fill & Sign Comment Income before discontinued operations Discontinued operations (net tax) Net income and comprehensive income Dividends declared and paid by Block, November 15, 2016 $237,000 (73,400) 163,600 110,000 Assume that the 32% interest is sufficient to make Block an associate of Mego, and that Mego is required to apply IFRS for its financial reporting. The fair value of Block's shares at December 31, 2016 is $155 per share. Required: a) Prepare the journal entry to record the purchase of the Block shares on January 3, 2016. b) Prepare all the necessary journal entries with Mego's investment in Block for 2016. Depreciable assets are depreciated on a straight-line basis. (hint: dividend, income, fair value at December 31, 2016 including assets subject to depreciation) c) After you recorded the above, prepare the journal entry assuming you were informed that Mego's long-term business prospects had deteriorated and the most Mego could expect to recover in the future or sell its investment in Block for December 31, 2016, is $124 per share. (hint: impairment entry) Open 6 7 130% Tools Fill & Sign Comment Question 7: Investment in Associate with significant influence (11 mar Click on Tools to convert files to PDF. On January 3, 2016, Mego Ltd. Purchased 3,230 shares (32%) of the common shares of Block Corp for $488,920. The following information is provided about the identifiable assets and liabilities of Block at the date of acquisition: Carrying Amount $ 544,000 830,000 Fair Value $ 544,000 940,000 Assets not subject to depreciation Assets subject to depreciation (10 years remaining) Total identifiable assets Liabilities 1,374,000 93,000 1,484,000 93,000 During 2016, Block reported the following information on its statement of comprehensive income: Income before discontinued operations Discontinued operations (net of tax) Net income and comprehensive income Dividends declared and paid by Block, November 15, 2016 $237,000 (73,400) 163,600 110,000 Assume that the 32% interest is sufficient to make Block an associate of Mego, and that Mego is required to apply IFRS for its financial reporting. The fair value of Block's shares at December 31, 2016 is $155 per share. Required: a) Prepare the journal entry to record the purchase of the Block shares on January 3, 2016. b) Prepare all the necessary journal entries with Mego's investment in Block for 2016. Depreciable assets are depreciated on a straight-line basis (hint: dividend income fair Open 6 7 130% Tools Fill & Sign Comment Income before discontinued operations Discontinued operations (net tax) Net income and comprehensive income Dividends declared and paid by Block, November 15, 2016 $237,000 (73,400) 163,600 110,000 Assume that the 32% interest is sufficient to make Block an associate of Mego, and that Mego is required to apply IFRS for its financial reporting. The fair value of Block's shares at December 31, 2016 is $155 per share. Required: a) Prepare the journal entry to record the purchase of the Block shares on January 3, 2016. b) Prepare all the necessary journal entries with Mego's investment in Block for 2016. Depreciable assets are depreciated on a straight-line basis. (hint: dividend, income, fair value at December 31, 2016 including assets subject to depreciation) c) After you recorded the above, prepare the journal entry assuming you were informed that Mego's long-term business prospects had deteriorated and the most Mego could expect to recover in the future or sell its investment in Block for December 31, 2016, is $124 per share. (hint: impairment entry)