Reference no: EM132363472
Question
On January 1, 2015, NorthCo, bought 25% of the outstanding common shares of Oppong Corporation for $320,000 cash and has the ability to significantly influence Oppong Corporation's financial and operating policies. At the date of acquisition of the shares, Oppong Corporation's net assets had a fair value of $880,000. Their carrying value was $560,000.
The difference was attributable to the fair value of Oppong Corporation's buildings and its land exceeding carrying value, each accounting for one half of the difference. Oppong Corporation's net income for the year ended December 31, 2015, was $210,000. During 2015, Oppong Corporation declared and paid cash dividends of $24,000. The buildings have a remaining life of 20 years. NorthCo follows IFRS.
(a) Prepare alll appropriate journal entries related to the investment during 2015, assuming NorthCo accounts for this investment by the equity method. Enter an appropriate description when entering the transactions in the journal. Dates must be entered in the format dd/mmm (ie. January 15 would be 15/Jan). Please make sure your final answer(s) are accurate to 2 decimal places.
(b) Determine the amount to be reported by NorthCo as an investment on its balance sheet. Please make sure your final answer(s) are accurate to the nearest whole number.
(c) Determine the amount to be reported by NorthCo as investment revenue on its income statement. Please make sure your final answer(s) are accurate to the nearest whole number.
(d) Determine the amount to be reported by NorthCo among investing activities on its cash flow statement. Please make sure your final answer(s) are accurate to the nearest whole number.
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