Question #1
On January 1, 2023, Flint Corporation purchased 20% of the outstanding voting shares in WLT Corporation for $1,220,000. At the time of purchase, WLT's net assets were undervalued by $56,400 and had a remaining useful life of 12 years. Both companies had a December 31 year-end. At the end of 2023, WLT reported a net income of $309,000. Also, on December 31, 2023, the fair value of the investment in WLT shares was $1,350,000. On January 10,2024 , WLT paid a cash dividend. Flint's ownership entitles it to $39,000 of the dividend. Prepare the journal entries on the books of Flint Corporation to record the transactions described above, assuming that the 20% interest in WLT does represent significant influence. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. 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.) Date Account Titles and Explanation Debit Credit (To record investment income) (To record amortization of fair value difference) Current Attempt in Progress On August 1, 2023, Shamrock Corporation purchased 20\% of the outstanding voting shares in WLT Corporation for $1,280,000. At the time of purchase, WLT's net assets were undervalued by $73,700 and had a remaining useful life of 12 years. Both companies had a December 31 year-end. At the end of 2023, WLT reported a net income of $329,000. Also, on December 31, 2023, the fair value of the investment in WLT shares was $1,406,000. On January 10, 2024, WLT paid a cash dividend. Shamrock's ownership entitles it to $15,200 of the dividend. Prepare the journal entries on the books of Shamrock Corporation to record the transactions described above, assuming that the 20% interest in WLT does not represent significant influence, and that Shamrock elected to account for its investment following the fair value through net income (FV-NI) model. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries.) eTextbook and Media List of Accounts Splish Ltd. is a Canadian publicly-traded business with a December 31 fiscal year end. In order to get a better return on some of its excess cash, Splish purchased 140 common shares of AFS Corporation on July 1, 2023 at a price of $4 per share. Due to the nature of the investment, Splish's management is accounting for the equity investment using the fair-value through other comprehensive income (FV-OCI) without recycling to net income. On August 1, 2023, AFS declared dividends of $1/ share, and paid those dividends on August 20, 2023. On December 31, 2023, shares in AFS were trading at $6 per share. On September 15, 2024, Splish sold the shares in AFS for $7 per share. Prepare the journal entries required to record the above transactions on the books of Splish Ltd. (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. Record journal entries in the order presented in the problem.) Credit
