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Prepare greenwater inc journal entries

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Question - As part of its long-term strategic plan, Greenwater Inc. purchased a 34% interest in the common shares of one of its suppliers, Prosperous Company. The purchase price of the investment was $928,330. This purchase gives Greenwater Inc. significant influence over Prosperous Company.

Greenwater Inc. purchased this investment on February 1, 2021. On February 1, 2021, Prosperous Company's net assets were undervalued in its accounting records by $49,700. This $49,700 difference is attributed to depreciable assets with a remaining useful life of 6 years.

On November 10, 2021, Prosperous Company declared and paid total dividends of $61,440 to the company's common shareholders.
For the year ended January 31, 2022, Prosperous Company earned net income of $164,792.

Greenwater Inc. follows IFRS.

Required - Prepare Greenwater Inc.'s journal entries for the 2022 fiscal year for its investment in the Prosperous Company shares. Greenwater Inc. has a year end of January 31.

Reference no: EM133146335

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