PART A

On January 1, Year 5, Anderson Corporation paid $736,000 for 23,000 (20%) of the outstanding shares of Carter Inc. The investment was considered to be one of significant influence. In Year 5, Carter reported profit of $98,000; in Year 6, its profit was $108,000. Dividends paid were $63,000 in each of the two years.

Required:

Calculate the balance in Andersons investment account as at December 31, Year 6.

Balance in Andersons investment account $

PART B

Now assume that on December 31, Year 6, Anderson lost its ability to significantly influence the operating, investing, and financing decisions for Carter when another party obtained sufficient shares in the open market to obtain control over Carter. Accordingly, the investment in Carter was reclassified as a FVTPL investment. The fair value of the Carter shares was $38 per share on this date.

In Year 7, Carter reported profit of $118,000 and paid dividends of $53,000. On December 31, Year 7, Anderson sold its investment in Carter for $40 per share.

Required:

(a) Prepare the journal entry at December 31, Year 6, to reclassify the investment from significant influence to FVTPL.

General Journal	Debit	Credit
(Click to select) OCI - Investment income Cash Net income Investment in Carter Investment loss Unrealized gain on FVTPL investment Dividend income Investment income
(Click to select) Dividend income OCI - Investment income Investment in Carter Investment income Investment loss Net income Cash Unrealized gain on FVTPL investment

(b) Prepare all journal entries for Year 7 related to Andersons investment in Carter. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)