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Prepare the year journal entries for shuswap

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Reference no: EM132659118

On January 1, Year 8, Shuswap Inc. and Kalamalka Inc. formed a new joint venture, Okanagan Inc. Shuswap contributed equipment with a book value of $1,120,000 and a fair value of $1,380,000 for a 35% share in the joint venture. The equipment has a remaining life of 20 years. Shuswap also received $469,000 cash. Kalamalka contributed various assets with a fair value of $1,692,000 for a 65% share. At year-end on December 31, Year 8, Okanagan had a profit of $199,000 and paid a dividend of $94,000.

Required:

Question a) Assume that the assets contributed by Kalamalka included cash of $469,000. This is the $469,000 that was given to Shuswap. The transfer of equipment to the joint venture by Shuswap did have commercial substance. Prepare the Year 8 journal entries for Shuswap.

Question b) Assume that the assets contributed by Kalamalka did not include any cash, and that the $469,000 provided to Shuswap had been borrowed by the joint venture. Also assume that the transfer of equipment to the joint venture by Shuswap did not have commercial substance. Prepare the Year 8 journal entries for Shuswap.

Reference no: EM132659118

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