Reference no: EM133062323
Question - On January 3, 2020, Bramble Limited purchased 3,400 (34%) of the common shares of Sonja Corp. for $ 501,240. The following information is provided about the identifiable assets and liabilities of Sonja at the date of acquisition:
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Carrying Amount
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Fair Value
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Assets not subject to depreciation
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$504,000
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$504,000
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Assets subject to depreciation (10 years remaining)
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824,000
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934,000
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Total identifiable assets
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1,328,000
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1,438,000
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Liabilities
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92,000
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92,000
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During 2020, Sonja reported the following information on its statement of comprehensive income:
Income before discontinued operations $179,000
Discontinued operations (net of tax) (64,300)
Net income and comprehensive income 114,700
Dividends declared and paid by Sonja November 15, 2020 94,000
Assume that the 34% interest is enough to make Sonja an associate of Bramble, and that Bramble is required to apply IFRS for its financial reporting. The fair value of Sonja's shares at December 31, 2020, is $151 per share.
Required -
a) Prepare the journal entry to record Bramble's purchase of the Sonja shares on January 3, 2020.
b) Prepare all necessary journal entries associated with Bramble's investment in Sonja for 2020. Depreciable assets are depreciated on a straight-line basis.
c) Prepare the journal entry if you were informed that Bramble's long-term business prospects had deteriorated and that the most Bramble could expect to recover in the future or to sell its investment in Sonja for at December 31, 2020, is $ 117 per share.