Chapter 1 Problem 11-13
1. Journal entries
a. Investment in associate 5,000,000
Cash 5,000,000
b. Investment in associate 1,200,000
Investment income 1,200,000
c. Cash 300,000
Investment in associate 300,000
d. Investment income 150,000
Investment in associate 150,000
2. Share in net income 1,200,000
Amortization of depreciable asset (750,000 / 5) ( 150,000)
Investment income 1,050,000
3. Acquisition cost 5,000,000
Share in net income (30% x 4,000,000) 1,200,000
Share in cash dividend (30% x 1,000,000) ( 300,000)
Amortization of depreciable asset (750,000 / 5) ( 150,000)
Carrying value of investment 5,750,000
Acquisition cost 5,000,000
Net assets acquired (30% x 12,000,000) 3,600,000
Excess of cost 1,400,000
Excess attributable to depreciable asset (30% x 2,500,000) 750,000
Excess attributable to goodwill 650,000
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