Prepare the journal entries for Lawrence

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Question - Lawrence Inc. acquired 20% of the outstanding common shares of Cherokee Inc. on December 31, 2019. The purchase price was $1,250,000 for 50,000 shares, and is equal to 20% of Cherokee's carrying amount. Cherokee declared and paid an $0.80 per share cash dividend on June 30 and again on December 31, 2020. Cherokee reported net income of $730,000 for 2020. The fair value of Cherokee's shares was $27 per share at December 31, 2020.

Required - Prepare the journal entries for Lawrence for 2019 and 2020, assuming that Lawrence follows IFRS and can exercise significant influence over Cherokee.

Reference no: EM133088138

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