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Potter Corp. ( Potter ) acquired 2 0 0 voting common shares of Slade Ltd . ' s ( Slade ) on January 1 ,
Potter Corp.Potter acquired voting common shares of Slade Ltds Slade on January for cash of $ At all relevant times, Slade had voting common shares
issued and outstanding with a stated value of $ On December the shares were trading at $ per share. The management of Potter classified this investment as
fair value through profit or loss FVTPL
On January Potter acquired an additional shares for cash of $ This second purchase of shares was enough to give Potter significant influence over the key
decisionmaking for Slade. Potter is using the equity method to account for its investment in Slade. Slade's book values approximated its fair values on the acquisition date with the
exception of the company's patent, which was estimated to have a fair value that was $ in excess of its recorded book value. The patent had a useful life of years on
acquisition date. Both companies use straight line amortization exclusively.
On January the shareholder's equity section of Slade was comprised of $ in common shares and retained earnings of $
On January Potter acquired an additional shares for cash of $ Potter now has control over Slade. The entire acquisition differential was allocated to land.
Slade's net income and dividends for and are as follows:
Net Income $ $ $
Dividends $ $ $
What is the gain or loss to be reported by Potter on December for its investment in Slade?
Multiple Choice
A $ loss.
A $ gain.
A $ gain.
No gain or loss to be reported.
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