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Pisces Corporation decided to purchase 35% of the outstanding shares of Libra Ltd. Pisces's CFO conducted an extensive evaluation of the financial statements of Libra

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Pisces Corporation decided to purchase 35% of the outstanding shares of Libra Ltd. Pisces's CFO conducted an extensive evaluation of the financial statements of Libra and reported his findings to the board of directors in the following memo Dear Board of Directors, Following your request, I conducted a detailed analysis of Libra Ltd. I found out that the liabilities reported in its books at December 31, 2019 in the amount of $ 20M fairly represent their economic values. As for the assets, their book value is $ 45M. The company owns an office building in downtown Toronto where its headquarters are located. The net book value of this building, including the land, is $ 10M. Libra purchased the land for $ 6M some 20 years ago and then constructed the building. I consulted with real estate experts and currently the fair value of the land is $ 9M and the fair value of the building is $ BM. The remaining useful life of the building in Libra's books is 20 years and I find this estimate realistic. The firm has developed a patent. According to my analysis, the fair value of the patent is $12M. Given future advances in technology, I expect the value of the patent to decline and become worthless 6 years from now. The patent was developed by the company and all the related costs were recorded as research and development expenses. Sincerely, Justin Medak, CPA The board of directors of Pisces Corporation adopted the report by Mr. Medak and on January 1, 2020, purchased 35% of the shares of Libra, based on its fair value according to Mr. Medak's analysis. After the acquisition of the shares, Pisces was able to exercise significant influence over Libra In 2020, Libra reported net income of $ 10M and distributed 40% of it as cash dividends. In 2021, the earnings of Libra doubled compared with 2020. Libra distributed 60% of its income as cash dividends On December 31, 2021, Pisces sold its investment in Libra Ltd. for $20M Required Assuming Pisces accounts for this investment using the method required under IFRS, 1. Record the initial purchase by Pisces Corp. 2. Record the entries related to the investment in Libra Ltd. for 2020. 3. Record the entries related to the investment in Libra Ltd. for 2021

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