Question 7 On January 3, 2020, Pina Colada Limited purchased 1,900 (19%) of the common shares of Sonja Corp. for $329,840. The following information is provided about the identifiable assets and liabilities of Sonja at the date of acquisition: Carrying Amount Fair Value $504,000 814,000 1,318,000 82,000 Assets not subject to depreciation Assets subject to depreciation (10 years remaining) Total identifiable assets Liabilities $504,000 1,044,000 1,548,000 82,000 During 2020, Sonja reported the following information on its statement of comprehensive income: Income before discontinued operations Discontinued operations (net of tax) Net income and comprehensive income Dividends declared and paid by Sonja November 15, 2020 $172,000 (57,400) 114,600 72,000 Assume that the 19% interest is enough to make Sonja an associate of Pina Colada, and that Pina Colada is required to apply IFRS for its financial reporting. The fair value of Sonja's shares at December 31, 2020, is $152 per share. Prepare the journal entry to record Pina Colada's purchase of the Sonja shares on January 3, 2020. (Hint: Any unexplained payment represents unrecognized goodwill of Sonja.) (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 0 for the amounts.) Account Titles and Explanation Debit Credit Date Jan. 3, 2020 Prepare all necessary journal entries associated with Pina Colada's investment in Sonja for 2020. Depreciable assets are depreciated on a straight-line basis. (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 0 for the amounts.) AcCount Titles and Explanation Debit Credit (To record dividends collected) (To record investment income or loss) (To record amortization of fair value difference) Prepare the journal entry if you were informed that Pina Colada's long-term business prospects had deteriorated and that the most Pina Colada could expect to recover in the future or to sell its investment in Sonja for at December 31, 2020, is $118 per share. (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 0 for the amounts.) Account Titles and Explanation Credit Debit Date Dec. 31, 2020