Baskin purchased 20,000 common shares (20%) of Robbin on January 1, Year 5, for $275,000 and classified the investment as FVTPL. Robbin reported net income of $85,000 in Year 5 and $90,000 in Year 6, and paid dividends of $40,000 in each year. Robbin’s shares were trading at $16 per share on December 31, Year 5, and January 1, Year 6. On January 1, Year 6, Baskin obtained significant influence over the operating, investing, and financing decisions of Robbin when the controlling shareholder sold some shares in the open market and lost control over Robbin.
Accordingly, the investment in Robbin was reclassified to an investment in associate. On December 31, Year 6, Baskin sold its investment in Robbin for $17 per share.
Required:
Prepare all journal entries for Years 5 and 6 related to Baskin’s investment in Robbin.