In early January 2023, Flounder Inc., a private enterprise that applies ASPE, purchased 40% of the common shares of Washi Corp. for$361,000. Flounder was now able to exercise considerable influence in decisions made by Washi's management. Washi's statement offinancial position reported the following information at the date of acquisition:Assets not subject to being amortizedAssets subject to depreciation (10 years average life remaining)LiabilitiesAdditional information:1.2.3.4.(a)$180,000546,000101,000Both the carrying amount and fair value are the same for non-depreciable assets and for liabilities.The fair value of the assets subject to depreciation is $660,000.The company depreciates its capital assets on a straight-line basis.Washi reported net income of $143,000 and declared and paid dividends of $99,000 in 2023.Prepare the journal entry to record Flounder's investment in Washi. Assume that any unexplained payment is goodwill. (Creditaccount titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" forthe account titles and enter O for the amounts. List debit entry before credit entry.)Account Titles and ExplanationDebitCredit b. Assuming Flounder Inc applies the equity method to account for its investment in Washi,prepare the journal entries to record Flounder Inc's equity in the net income and the receipt ofdividends from Washi Corp. in 2023.Account TitlesCashInvestment in Associate(To record collection of dividend)Investment In AssociateInvestment Income or Loss(To record investment income)(To record depreciation of fair value difference)Debit Credit

Journal entry is the first stage of the accounting process.Journal entries are used to record…

In early January 2023, Flounder Inc., a private enterprise that applies ASPE, purchased 40% of the common shares of Washi Corp. for $361,000. Flounder was now able to exercise considerable influence in decisions made by Washi's management. Washi's statement of financial position reported the following information at the date of acquisition: Assets not subject to being amortized Assets subject to depreciation (10 years average life remaining) Liabilities Additional information: 1. 2. 3. 4. $180,000 546,000 101,000 Both the carrying amount and fair value are the same for non-depreciable assets and for liabilities. The fair value of the assets subject to depreciation is $660,000. The company depreciates its capital assets on a straight-line basis. Washi reported net income of $143,000 and declared and paid dividends of $99,000 in 2023.

In early January 2023, Flounder Inc., a private enterprise that applies ASPE, purchased 40% of the common shares of Washi Corp. for $361,000. Flounder was now able to exercise considerable influence in decisions made by Washi's management. Washi's statement of financial position reported the following information at the date of acquisition: Assets not subject to being amortized Assets subject to depreciation (10 years average life remaining) Liabilities Additional information: 1. 2. 3. 4. $180,000 546,000 101,000 Both the carrying amount and fair value are the same for non-depreciable assets and for liabilities. The fair value of the assets subject to depreciation is $660,000. The company depreciates its capital assets on a straight-line basis. Washi reported net income of $143,000 and declared and paid dividends of $99,000 in 2023.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 8MC

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