Assignment $\backslash$#$1$

LO $1-$ Chapter $9$

Name:

$2.$ The summarized balance sheets of Abyssinian Corporation and Norwegian Investment $10$ marks Enterprises Inc. are as follows as at their year end date of May $31,2024$:

Abyssinian Corporation

Balance Sheet

May $31,2024$

Assets

Liabilities

Common shares

Retained earnings

Total liabilties and shareholders' equity

Norwegian Investment Enterprises Inc.

Balance Sheet

May $31,2024$

Assets

Liabilities

Common shares

Retained earnings

Total liabilties and shareholders' equity

$\backslash [$

$\backslash$$ $\backslash$quad $76,928$

$\backslash ]$

On May $31,2024,$ Norwegian Investment Enterprises purchased a significant portion of the common shares outstanding in Abyssinian Corporation. The details of this purchase follow:

Percentage of total common shares purchased

Purchase price paid by Norwegian for the common shares

On October $15,2024,$ Abyssinian Corporation declared and paid a total dividend of the following amount:

For the year ended May $31,2025,$ Abyssinian Corporation reported net income of the following amount:

$\backslash$$ $525,981$

$2.($Continued$)$

Abyssinian Corporation and Norwegian Investment Enterprises both follow ASPE. Norwegian Investment Enterprises will use the equity method to account for this investment.

Required:

$1.$ Calculate the portion of the purchase price paid by Norwegian Investment Enterprises for the Abyssinian shares that represents goodwill $(3$ marks$).$

$2.$ Prepare all journal entries required by Norwegian Investment Enterprises to account for its investment in Abyssinian Corporation for the $2024$ and $2025$ years $(7$ marks$).$