On June 30, 2015, the shareholders’ equity of Fabinet, a foreign corporation, was 10,500,000 FC. At that time, Newcore, a U.S. corporation, acquired 40% in Fabinet by paying $3,120,000 when 1 FC was equal to $0.60. Equipment, with a fair market value that exceeded cost by $240,000, accounted for a portion of the cost in excess of book value. The equipment was expected to have a remaining useful life of 10 years and be depreciated using the straight-line method. The balance of the cost in excess of book value was traceable to goodwill.
During the last six months of 2015, Fabinet reported net income of 1,260,000 FC of which 126,000 FC was declared and paid as a dividend. At the end of 2015, Newcore tested the goodwill for impairment and recognized an impairment loss of $100,000. Additional exchange rates are as follows:
Weighted average for last six months of 2015 ..... 1 FC = $0.64
Date of dividend declaration ............ 1FC = 0.66
December 31, 2015 ................ 1 FC = 0.68
Prepare all relevant entries to record Newcore’s interest in Fabinet under the sophisticated equity method.