Harnish Inc. acquired 25% of the outstanding common shares of Gregson Inc. on December 31, 2016. The

Question:

Harnish Inc. acquired 25% of the outstanding common shares of Gregson Inc. on December 31, 2016. The purchase price was $1,250,000 for 62,500 shares, and is equal to 25% of Gregson's carrying amount. Gregson declared and paid a $0.75 per share cash on June 15 and again on December 15, 2017. Gregson reported net income of $520,000 for 2017. The fair value of Gregson's shares was $21 per share at December 31, 2017. Harnish is a public company and applies IFRS.
Instructions
(a) Prepare the journal entries for Harnish for 2016 and 2017, assuming that Harnish cannot exercise significant influ- ence over Gregson. The investment is accounted for using the FV-OCI model.
(b) Prepare the journal entries for Harnish for 2016 and 2017, assuming that Harnish can exercise significant influence over Gregson.
(c) What amount is reported for the investment in Gregson shares on the December 31, 2017 statement of financial position under each of these methods in (a) and (b), and where is the investment reported on this statement?
(d) What amount is reported on Harnish's statement of comprehensive income in 2017 under each of these methods, and where are the amounts reported?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...