Question: PART A On January 1 Year 5 Anderson Corporation paid

On January 1, Year 5, Anderson Corporation paid $650,000 for 20,000 (20%) of the outstanding shares of Carter Inc. The investment was considered to be one of significant influence. In Year 5, Carter reported profit of $95,000; in Year 6, its profit was $105,000. Dividends paid were $60,000 in each of the two years.
Calculate the balance in Anderson's investment account as at December 31, Year 6.
Now assume that on December 31, Year 6, Anderson lost its ability to significantly influence the operating, investing, and financing decisions for Carter when another party obtained sufficient shares in the open market to obtain control over Carter. Accordingly, the investment in Carter was reclassified as a FVTPL investment. The fair value of the Carter shares was $35 per share on this date.
In Year 7, Carter reported profit of $115,000 and paid dividends of $50,000.
On December 31, Year 7, Anderson sold its investment in Carter for $37 per share.
(a) Prepare the journal entry at December 31, Year 6, to reclassify the investment from significant influence to FVTPL.
(b) Prepare all journal entries for Year 7 related to Anderson's investment in Carter.

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