QUESTION 3 (8 Marks)

On January 1, 2022, Gilmore Corporation purchased 70,000 common shares of Low Ltd. for $30 per share. At the time, Low had 370,000 shares outstanding. At the time of purchase, Lows equipment was undervalued by $30,000 and had a remaining useful life of 10 years. Both companies have a December 31 year-end. On May 31, Low declared and paid a cash dividend of $0.45 per share. On December 31, 2022, Low reported a net income of $290,000. The shares in Low were trading at $26 per share on that day.

REQUIRED:

1. Assume that the investment in Low does not represent significant influence, and that Gilmore classifies the investment as FV-NI. Prepare the necessary journal entries on the books of Gilmore Corporation to record the above transactions. (3 Marks)

Note: Round all currency amounts to the nearest whole amount (i.e., no decimals).