Reference no: EM132992423
Question - On January 2, 2021, Greenwater Inc., a private company that follows ASPE, purchased 35% of the common shares of Blue Moon Corporation for $735,000. This investment gave Greenwater signi?cant in?uence over Blue Moon. On January 2, 2021, the balance sheet of Blue Moon Corporation reported the following information:
Non-depreciable assets $583,000
Assets subject to depreciation $1,563,000
Liabilities $304,100
The fair value of Blue Moon's non-depreciable assets is equal to the carrying value. The carrying value of Blue Moon's depreciable assets is $236,000 less than the fair value of these assets. Blue Moon's depreciable assets have a remaining useful life of 10 years.
During the 2021 year, Blue Moon Corporation earned net income of $107,500 and paid dividends of $16,000.
Required - Prepare Greenwater's journal entries related to this investment using the equity method. Both Greenwater and Blue Moon have December 31 year ends.
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