question 2

Question 2 (6 points) On January 2, 2020, Greenwater Inc. purchased a 30% interest in Blue Moon Corporation for $475,000. This investment gave Greenwater significant influence over Blue Moon. Assume that on January 2, 2020, Blue Moon's net assets were undervalued by $54,000. This undervaluation arises solely from depreciable assets with a remaining useful life of 8 years. During the 2020 year, Blue Moon incurred a net loss of $5,000 and paid dividends of $10,500. Required: Prepare Greenwater's journal entries related to this investment using the equity method. Greenwater applies IFRS. Both Greenwater and Blue Moon have December 31 year ends