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X Ltd . ( X ) purchased 4 0 % of Y Ltd . ( Y ) on January 1 , 2 0 2 2

X Ltd.(X) purchased 40% of Y Ltd.(Y) on January 1,2022, for $400,000. Y paid dividends of
$50,000 in each year. Y's income statements for 2022 and 2023 showed the following.
x Ltd.(x) purchased 40% of Y Ltd.(Y) on January 1,2022, for $400,000. Y paid
dividends of
$50,000 in each year. Y's income statements for 2022 and 2023 shquad the
following.
Time left 1:29:35
At December 31,2022, the fair value of the investment was $440,000 and at
December 31,2023, the fair value of the investment was $420,000.
Required (25 marks):
a) Prepare X's journal entries for 2022 and 2023, assuming that this is a non-
strategic investment and is accounted for at fair value through profit and loss
(FVTPL).2022
2023
Income (loss) before income taxes
$100,000
($60,000)
Income taxes expense (recovery)
40,000
(15,000)
Net income (loss)
$60,000
($45,000)
Other comprehensive income (next of tax)
20,000
25,000
Comprehensive income (loss)
$80,000
($20,000)
At December 31,2022, the fair value of the investment was $440,000 and at December 31,2023, the fair value of the investment was $420,000.
Required (25 marks):
a) Prepare X's journal entries for 2022 and 2023, assuming that this is a non-strategic investment and is accounted for at fair value through profit and loss (FVTPL).
b) Prepare X's journal entries for 2022 and 2023, assuming that this is a significant influence investment and will be reported using the equity method.
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