There are 260,000 common shares issued and outstanding in PC Inc. Champion Incorporated bought 91,000 common...

 

  

  

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There are 260,000 common shares issued and outstanding in PC Inc. Champion Incorporated bought 91,000 common shares of PC Inc. on December 31, 2020 for $957,000. This acquisition provided Champion Incorporated with significant influence over PC Inc. On December 31, 2020, PC Inc. reported assets of $4,600,000 and liabilities of $1,932,000 on its balance sheet. The book values of PC Inc.'s assets and liabilities are equal to their fair values, except for depreciable assets. PC Inc.'s depreciable assets have a fair value of $610,000 and a net book value of $558,000. These depreciable assets have a remaining useful life of 8 years. On September 10, 2021, PC Inc. paid a total of $95,000 in dividends to its common shareholders. For the year ended December 31, 2021, PC Inc. generated net income of $326,000. Champion Incorporated follows IFRS. Required: Calculate the amount of goodwill included in the $957,000 purchase price of the investment. (2 marks) Prepare the journal entries required for Champion Incorporated's investment in PC Inc. on each of the following dates: December 31, 2020 (1 mark) September 10, 2021 (1.5 marks) December 31, 2021 (3.5 marks) 15:52 There are 260,000 common shares issued and outstanding in PC Inc. Champion Incorporated bought 91,000 common shares of PC Inc. on December 31, 2020 for $957,000. This acquisition provided Champion Incorporated with significant influence over PC Inc. On December 31, 2020, PC Inc. reported assets of $4,600,000 and liabilities of $1,932,000 on its balance sheet. The book values of PC Inc.'s assets and liabilities are equal to their fair values, except for depreciable assets. PC Inc.'s depreciable assets have a fair value of $610,000 and a net book value of $558,000. These depreciable assets have a remaining useful life of 8 years. On September 10, 2021, PC Inc. paid a total of $95,000 in dividends to its common shareholders. For the year ended December 31, 2021, PC Inc. generated net income of $326,000. Champion Incorporated follows IFRS. Required: Calculate the amount of goodwill included in the $957,000 purchase price of the investment. (2 marks) Prepare the journal entries required for Champion Incorporated's investment in PC Inc. on each of the following dates: December 31, 2020 (1 mark) September 10, 2021 (1.5 marks) December 31, 2021 (3.5 marks) 15:52

Answer rating: 100% (QA)

Step 1 IFRS 28 is providing guidance on accounting for investments in associates The equity method i... View the full answer