Question: In early January 2014 Chi Inc a private enterprise that

In early January 2014, Chi Inc., a private enterprise that applies ASPE, purchased 40% of the common shares of Washi Corp. for $410,000. Chi was now able to exercise considerable influence in decisions made by Washi's management. Washi Corp.’s statement of financial position reported the following information at the date of acquisition:
Assets not subject to being amortized ............... $205,000
Assets subject to amortization (10 years average life remaining) ..... 620,000
Liabilities .......................... 115,000
Additional information:
1. Both the carrying amount and fair value are the same for assets that are not subject to amortization and for the liabilities.
2. The fair value of the assets subject to amortization is $750,000.
3. The company amortizes its capital assets on a straight-line basis.
4. Washi reported net income of $163,000 and declared and paid dividends of $112,000 in 2014.
(a) Prepare the journal entry to record Chi's investment in Washi Corp. Assume that any unexplained payment is goodwill.
(b) Assun1ing Chi applies the equity method to account for its investment in Washi, prepare the journal entries to record Chi's equity in the net income and the receipt of dividends from Washi Corp. in 2014.
(c) Assun1e the same facts as above and in part (b), except that Washi's net income included a loss on discontinued operations of $38,000 (net of tax). Prepare the journal entries necessary to record Chi's equity in the net income of Washi for 2014.
(d) Assume that Chi is a publicly accountable enterprise that applies IFRS and therefore also applies the equity method to account for its associate. In addition to the information in parts (a) and (b), you are told that Washi also reports an unrealized gain of $45,000 on investments accounted for using FV-OCI. If Chi Inc. reports net income of $172,400 and an unrealized gain in OCI of $10,000 on its own financial statements before including the results of its investment in Washi, determine Chi Inc.'s net income, other comprehensive income, and comprehensive income reported on its 2014 statement of comprehensive income. Both Chi and Washi follow a policy of reclassifying realized gains and losses on FV-OCI investments to net income.

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