On January 1, Year 1, Light paid $250,000 for 300,000 (39%) of the outstanding shares of Dark.
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Question:
On January 1, Year 1, Light paid $250,000 for 300,000 (39%) of the outstanding shares of Dark. Dark's net income for Year 1 was $750,000. On January 1, the following fair value differentials existed:
Carrying Value Fair Value
Accounts Receivable $12,000 $30,000
Land $101,000 $126,000
Depreciable Asset $12,000 $28,000 -
As at Dec 31, Year 1, the land was still owned by Dark.
The fair value difference for the depreciable asset relates to an asset that had a remaining useful life of 5 years.
Calculate the income recorded to the P&L for the year ended December 31, Year 1 assuming that the investment is classified as Investment in Associate (significant influence).
Related Book For
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay
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