Chapter 1 Problem 11-12
1. Journal entries
a. Investment in associate 6,000,000
Cash 6,000,000
b. Investment in associate 750,000
Investment income 750,000
c. Cash 450,000
Investment in associate 450,000
d. Investment income 200,000
Investment in associate 200,000
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2. Share in net income 750,000
Amortization of patent (2,000,000 / 10) (200,000)
Investment income 550,000
3. Acquisition cost 6,000,000
Share in net income (5,000,000 x 15%) 750,000
Share in cash dividend (3,000,000 x 15%) ( 450,000)
Amortization of patent (2,000,000 / 10) ( 200,000)
Carrying value 6,100,000
Interest acquired (30,000 / 200,000) 15%
Acquisition cost 6,000,000
Book value of net assets acquired 4,000,000
Excess of cost applicable to patent 2,000,000
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