Heaven Company

Required1
Net income for 2020 3,000,000
Unrealized profit in 12/31/2020 inventory of Heaven (900,000-600,000) -300,000
Adjusted net income 2,700,000

Investor's share (20% x 2,700,000) 540,000

Required2
Net income for 2021 4,000,000
Realized profit in 12/31/2020 inventory of Heaven Company 300,000
Unrealized profit in 12/31/2021 inventory of Heaven Company (750,000-500,000) -250,000
Adjusted net income 4.050,000

Investor's share (20% x 4,050,000) 810,000

Required3 Debit Credit

2020
Jan-01 Investment in associate 6,000,000
Cash 6,000,000

Dec-31 Investment in associate 540,000

Investment income 540,000

31 Cash (20% x 1,000,000) 200,000

Investment in associate 200,000

2021
Dec-31 Investment in associate 810,000
Investment income 810,000

31 Cash (20% x 1,500,000) 300,000

Investment in associate 300,000

Required4
Acquisition cost 6,000,000
Share in profit of associate - 2020 540,000
Share in cash dividend-2020 -200,000
Share in profit of associate - 2021 810,000
Share in cash dividend-2021 -300,000
Carrying amount- 12/31/2021 6,850,000
Glorious Company

Required1
Net income for 2020 2,000,000
Unrealized profit on sale of equipment sold on 1/1/2020 (800,000 - 500,000) -300,000
Realized profit on equipment sold on 1/1/2020 (10% x 300,000) 30,000
Adjusted net income 1,730,000

Investor's share (40% x 1,730,000) 692,000

Required2
Net income for 2021 3,000,000
Realized profit on equipment sold on 1/1/2020 (10% x 300,000) 30,000
Unrealized profit on sale of equipment on 7/1/2021 (900,000-500,000) -400,000
Realized profit on equipment sold on 7/1/2021 (400,000/5 x 1/2) 40,000
Unrealized profit on ending inventory on 12/31/2021 (2,800,000 2,000,000) -800,000
Adjusted net income 1,870,000

Investor's share (40% x 1,870,000) 748,000

Required3 Debit Credit

2020
Jan-01 Investment in associate 5,000,000
Cash 5,000,000

Dec-31 Investment in associate 692,000

Investment income 692,000

31 Cash (40% x 800,000) 320,000

Investment in associate 320,000

2021
Dec. 31 Investment in associate 748,000
Investment income 748,000

31 Cash (40% x 1,000,000) 400,000

Investment in associate 400,000

Required4
Acquisition cost 5,000,000
Investment income-2020 692,000
Cash dividend-2020 -320,000
Investment income 2021 748,000
Cash dividend-2021 -400,000
Carrying amount-12/31/2021 5,720,000
Interlude Company

Required1
Acquisition cost 3,200,000
Net assets acquired (30% x 6,000,000) -1,800,000
Excess of cost 1,400,000
Excess attributable to equipment (30% x 3,000,000) -900,000
Goodwill 500,000

Required2
Net income for 2020 4,000,000
Unrealized profit on 12/31/2020 inventory -600,000
Adjusted net income 3,400,000

Investor's share (30% x 3,400,000) 1,020,000

Amortization of excess attributable to equipment (900,000/5) -180,000
Investment income 840,000

Required3 Debit Credit

1 Investment in associate 3,200,000
Cash 3,200,000

2 lnvestment in associate 840,000

Investment income 840,000

3 Cash (30% x 1,500,000) 450,000

Investment in associate 450,000

4 Investment in associate 600,000

Revaluation surplus (30% x 2,000,000) 600,000

Required4
Acquisition cost 3,200,000
Investment income 840,000
Cash dividend -450,000
Revaluation surplus 600,000
Carrying amount-12/31/2019 4,190,000
Jam Company

Required a
Fair value of 10% existing interest 2,400,000
Cost of 20% new interest 5,000,000
Total cost 7,400,000
Carrying amount of net assets acquired (30% x 20,000,000) 6,000,000
Goodwill 1,400,000

Required b Debit Credit

1 Memo-Received 500 shares as 10% stock dividend on 5,000 original
Dale ordinary shares. Shares now held, 5,500.

2 Cash (5,500 x 20) 110,000

Dividend income 110,000

3 Investment in associate 5,000,000

Cash 5,000,000

Investment in associate 400,000

Gain on remeasurement to equity 400,000

Investment in associate 2,400,000

Investment in equity securities (Reclassification) 2,400,000

4 Investment in associate 1,800,000

Investment income (30% x 6,000,000) 1,800,000

Cash (75,000 x 20) 1,500,000

Investment in associate 1,500,000

Required c
Noncurrent assets:
Investment in equity securities (Note) 2,850,000
Investment in associate Fox Company 7,700,000

Note Investment in equity securities

Dale Corporation, 5,500 shares 1,250,000

Ever Corporation, 10,000 shares 1,600,000
Total cost 2,850,000
Fame Company

Required1
Fair value of existing interest 6,000,000
Cost of additional interest 11,000,000
Total cost 17,000,000
Carrying amount of net assets acquired (30% x 40,000,000) 12,000,000
Excess of cost 5,000,000
Excess attributable to equipment (30% x 5,000,000) 1,500,000
Goodwill 3,500,000

Required2 Debit Credit

2020
Jan-01 Financial asset at FVOCI 5,000,000
Cash 5,000,000

Dec-31 Financial asset at FVOCI 500,000

Unrealized gain-OCI 500,000

2021
Dec-31 Financial asset at FVOCI 500,000
Unrealized gain-OCI 500,000

2022
Jan-01 Unrealized gain-OCI 1,000,000
Retained earnings 1,000,000

1 Investment in associate 11,000,000

Cash 11,000,000

1 Investment in associate 6,000,000

Financial asset at FVOCI 6,000,000

Dec-31 Investment in associate 2,700,000

Investment income (30% x 9,000,000) 2,700,000

31 Cash (30x4,000,000) 1,200,000

Investment in associate 1,200,000

31 Investment income 300,000

Investment in associate (1,500,000/5) 300,000
Hazel Company

Required Debit Credit

2020
Jan-01 Investment in associate 8,000,000
Cash 8,000,000

Dec-31 Investment in associate 1,500,000

Investment income (30 % x 5,000,000) 1,500,000

31 Cash (30% x 2,000,000) 600,000

Investment in associate 600,000

2021
Jun-30 Investment in associate 1,800,000
Investment income (30% x 6,000,000) 1,800,000

Jul-01 Cash 6,000,000

Investment in associate (10,700,000 x 1/2) 5,350,000
Gain on sale of investment 650,000

1 Investment in associate 1,150,000

Gain from remeasurement to fair value (6,500,000-5,350,000) 1,150,000

1 Financial asset at FVOCI 6,500,000

Investment in associate 6,500,000

Oct-01 Cash (2,500,000 x 15%) 375,000

Dividend income 375,000

Dec-31 Unrealized loss other comprehensive income 600,000

Financial asset at FVOCT (6,500,000-5,900,000) 600,000