E927 LO 5 6 8 Equity Method with Cost in Excess of Share of Carrying Amount Impairment On January 3 2023 Mego Limited purchased 3000 30 of the common shares of Sonja Corp for 438000 The following information is provided about the identifiable assets and liabilities of Sonja at the date of acquisition Carrying Amount Fair Value Assets not subject to depreciation 550000 550000 Assets subject to depreciation 10 years remaining 760000 880000 Total identifiable assets 1310000 1430000 Liabilities 110000 110000 During 2023 Sonja reported the following information on its statement of comprehensive income Income before discontinued operations 200000 Discontinued operations net of tax 50000 Net income and comprehensive income 150000 Dividends declared and paid by Sonja on November 15 2023 110000 Assume that the 30 interest is enough to make Sonja an associate of Mego and that Mego is required to apply IFRS for its financial reporting The fair value of Sonjas shares at December 31 2023 is 147 per share Instructions Prepare the journal entry to record Megos purchase of the Sonja shares on January 3 2023 Hint Any unexplained payment represents unrecognized goodwill of Sonja Prepare all necessary journal entries associated with Megos investment in Sonja for 2023 Depreciable assets are depreciated on a straightline basis Would any of your entries in part b change if you were told that Megos longterm business prospects had deteriorated and that the most Mego could expect to recover in the future or to sell its investment in Sonja for at December 31 2023 is 115 per share If so prepare the entry and explain briefly An icon reads Ethics A member of senior management has approached you a CPA informing you that instead of the shares being worth 115 per share as in part c the shares are worth 150 each Senior management receives a bonus based on net income He mentions that the assumptions about longterm business prospects are too pessimistic and are not reflective of the economic reality at Sonja You feel pressure to appease management given that your boss is a member of senior management What should you do