Reference no: EM132781322

Sheffield Corporation purchased a 25% interest in Krov Corporation on January 2, 2020, for $960. At that time, the carrying amount of Krov's net assets was $3,600. Any excess of the cost of the investment over Sheffield's share of Krov's carrying amount can be attributed to unrecorded intangibles with a useful life of 20 years. Krov declared and paid a dividend of $10 and reported net income of $65 for its year ended December 31, 2020. Assume that Sheffield Corporation is a private enterprise that applies ASPE.

problem 1) prepare Sheffield's 2020 entries to record all transactions and events related to its significant influence investment in Krov Corporation, assuming that Krov's shares are traded in an active market, Sheffield applies the FV-NI approach, and the fair value of Sheffield's share of Krov Corp. at December 31, 2020, is $1,040

problem 2) Prepare Sheffield's 2020 entries to record all transactions and events related to its significant influence investment in Krov Corporation, assuming that Sheffield applies the cost method to account for its investment in Krov (the shares are not traded in an active market).