On January 1, 2022, Pearl Corporation acquired another 1,500,000 common shares of Sapphire Company for $3.20...

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On January 1, 2022, Pearl Corporation acquired another 1,500,000 common shares of Sapphire Company for $3.20 cach. The book values of Sapphire's net assets were equal to fair values except for specialized equipment, which was understated by $48,000. The equipment had an estimated remaining life of 12 years. During 2022, Sapphire reported net income of $180,000 and paid dividends of $18,000. At December 31, 2022, the fair value of Sapphire's shares was $3.50 per share. REQUIRED: b) Prepare the journal entries on the books of Pearl Corporation for the investment in Sapphire for the 2022 fiscal year. (4 Marks) On January 1, 2022, Pearl Corporation acquired another 1,500,000 common shares of Sapphire Company for $3.20 cach. The book values of Sapphire's net assets were equal to fair values except for specialized equipment, which was understated by $48,000. The equipment had an estimated remaining life of 12 years. During 2022, Sapphire reported net income of $180,000 and paid dividends of $18,000. At December 31, 2022, the fair value of Sapphire's shares was $3.50 per share. REQUIRED: b) Prepare the journal entries on the books of Pearl Corporation for the investment in Sapphire for the 2022 fiscal year. (4 Marks)

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