Telecom Mobile Inc. purchased 30% of Flash Corporation’s 29,000 outstanding common shares at a cost of...
Telecom Mobile Inc. purchased 30% of Flash Corporation’s 29,000 outstanding common shares at a cost of $15 per share on January 3, 2018. The purchase price of $15 per share was based solely on the book value of Flash’s net assets. On September 21, Flash declared and paid a cash dividend of $37,800. On December 31, Telecom Mobile’s year end, Flash reported net income of $82,000 for the year. Flash shares had a fair value of $14.75 per share at December 31. Telecom Mobile Inc., a private Canadian corporation applies ASPE.
Required
1. Under the assumption that the 30% holding of Flash does not give Charles significant influence over Flash, prepare the 2018 entries using the FV-NI Method.
Homework Answers
| Date | Journal Entry | Debit | Credit |
| 03-Jan | Available for Sale Securities | $131,850.00 | |
| Cash | $131,850.00 | ||
| ( Being 30% of 29000 share purchased @ $15) | |||
| 21-Sep | Cash | $24,600.00 | |
| Dividend Income | |||
| ( Bein Dividend received, 82000*30%) | $24,600.00 | ||
| 31-Dec | Unrealized Holding Loss | $2,175.00 | |
| Security Fair Value Adjustment | $2,175.00 | ||
| ( Unralized loss booked and adjusted , Fairvalue @ 14.75) |
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