Swifty, Inc. purchased 30% of Nadal Corporation’s 31,000 outstanding common shares at a cost of $15...
Swifty, Inc. purchased 30% of Nadal Corporation’s 31,000 outstanding common shares at a cost of $15 per share on January 3, 2017. The purchase price of $15 per share was based solely on the book value of Nadal’s net assets. On September 21, Nadal declared and paid a cash dividend of $40,600. On December 31, Swifty’s year end, Nadal reported net income of $88,000 for the year. Nadal shares had a fair value of $14.75 per share at December 31. Swifty, Inc., a private Canadian corporation, applies ASPE.
Under the assumption that the 30% holding of Nadal does not give Swifty significant influence over Nadal, identify the possible accounting methods Swifty could use under ASPE to account for its investment.
1) Prepare all required 2017 journal entries under FV-NI METHOD
2) Prepare all required 2017 journal entries under COST METHOD
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Swifty, Inc. purchased 30% of Nadal Corporation’s 31,000
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