Ans:
Solution:(1): Following is the required journal entries:
Particulars |
Debit($) |
Credit ($) |
(1) Investment in AMC common shares |
570,000 |
|
Cash |
570,000 |
|
(2) No journal entry required |
||
(3) Cash |
24,500 |
|
Investment Revenue |
24,500 |
|
(4) Fair value adjustment |
34,000 |
|
Net unrealised holding gains and losses- OCI |
34,000 |
Working notes:
Cash Dividends = 25%*490,000*$0.20 = $24,500
Adjustment entry:
Fair value adjustment = 570,000-604,000 = $34,000
Solution:(2): Following is the required journal entries:
Particulars |
Debit($) |
Credit($) |
(1) Investment in AMC common shares |
570,000 |
|
Cash |
570,000 |
|
(2) Investment in AMC common shares |
85,000 |
|
Investment Revenue |
85,000 |
|
(3) Cash |
24,500 |
|
Investment in AMC common shares |
24,500 |
|
(4) No journal entry required |
Working notes:
Net Income:
Investment in AMC common shares = 25%*340000
= $85,000
Cash Dividends = 25%*490,000*$0.20 = $24,500
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