Question 5 (5 marks)

On January 1, 2017, your company acquires 10,000 shares of Investee Business Limited (IBL), representing 40% of the shares of IBL, for $200,000. As part of that investment, your company is entitled to appoint one director to the four-member Board of Directors.

For the year ended December 31, 2017, IBL earns $400,000 of profit (net income) and no other comprehensive income.

On January 2, 2018, IBL declares and pays dividends totaling $80,000 to all shareholders.

REQUIRED

Prepare journal entries for the following dates:

January 1, 2017;

December 31, 2017; and

January 2, 2018.