Reference no: EM132462461

Shamrock Inc acquired 100,000 common shares, which is 25% of the outstanding common shares, of Tahiti Ltd. on January 1, 2020 for $590,000. At the time of purchase, Tahiti Ltd. depreciable assets were undervalued by $42,000. The depreciable assets had a remaining useful life of 5 years with no salvage value. Tahiti Ltd. declared and paid a cash dividend of $0.40 per share on July 31, 2020. Tahiti Ltd. reported $1.2 million as net income on December 31, 2020 for the year ending. Also, on December 31, 2020, the fair value of the investment in Tahiti Ltd shares was $642,000.

Question 1: Prepare the journal entries for 2020 in the books of Shamrock Inc. relating to above transactions assuming that Shamrock Inc. is not in a position to exercise significant influence over Tahiti Ltd, and that Shamrock elected to account for its investment following the fair value through net income (FV-NI) model. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

• Date
• Account Titles and Explanation
• Debit
• Credit
• January 1, 2020July 31, 2020December 31, 2020
• January 1, 2020July 31, 2020December 31, 2020
• January 1, 2020July 31, 2020December 31, 2020