On January 1, 2022, Gilmore Corporation purchased 70,000 common shares of Low Ltd. for $30 per share. At the time, Low had 370,000 shares outstanding. At the time of purchase, Low's equipment was undervalued by $30,000 and had a remaining useful life of 10 years. Both companies have a December 31 year-end. On May 31, Low declared and paid a cash dividend of $0.45 per share. On December 31, 2022, Low reported a net income of $290,000. The shares in Low were trading at $26 per share on that day.

 

REQUIRED:

Assume that the investment in Low does not represent significant influence, and that Gilmore classifies the investment as FV-NI. Prepare the necessary journal entries on the books of Gilmore Corporation to record the transactions.

Assume that the investment in Low does represent significant influence. Prepare the necessary journal entries on the books of Gilmore Corporation to record the transactions. 

Answer rating: 100% (QA)

For the first part of your question since the investment in Low does not represent sig... View the full answer