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  • Intermediate Accounting 1 Valix Chapter 17

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    Boorish Company purchased a 30% interest in an associate company for $5 million on January 1, 2020. Over 2020 and 2021, Boorish recorded its share of the associate's net income and cash dividends, as well as amortization of an excess attributable to equipment. Journal entries were provided to record the investment at cost, the share of net income and cash dividends for each year, and annual amortization of the equipment excess.

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    Intermediate accounting 1 Valix Chapter 17

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    Boorish Company purchased a 30% interest in an associate company for $5 million on January 1, 2020. Over 2020 and 2021, Boorish recorded its share of the associate's net income and cash dividends, as well as amortization of an excess attributable to equipment. Journal entries were provided to record the investment at cost, the share of net income and cash dividends for each year, and annual amortization of the equipment excess.

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    2K views2 pages

    Intermediate Accounting 1 Valix Chapter 17

    Uploaded by

    Captain Shield
    Boorish Company purchased a 30% interest in an associate company for $5 million on January 1, 2020. Over 2020 and 2021, Boorish recorded its share of the associate's net income and cash dividends, as well as amortization of an excess attributable to equipment. Journal entries were provided to record the investment at cost, the share of net income and cash dividends for each year, and annual amortization of the equipment excess.

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    PROBLEM 17 – 1

    REQUIREMENT: Prepare journal entries on the books of Boorish


    Company from January 1, 2020 to December 31, 2021.

    January 1, 2020

    1. To record the purchase which is recognize at cost:


    Investment in associate 5,000,000
    Cash 5,000,000

    2. To record the share in net income equal to 30% of 4,000,000


    or 1,200,000:
    Investment in associate 1,200,000
    Investment income 1,200,000

    3. To record the share in cash dividend:


    Cash (30% x 3,000,000) 900,000
    Investment in associate 900,000

    4. To record the amortization of the excess attributable to


    the equipment:
    Investment income 200,000
    Investment in associate 200,000
    (1,000,000 / 5 years)
    December 31,2021

    1. To record the share in net income equal to 30% of 6,000,000


    or 1,800,000:
    Investment in associate 1,800,000
    Investment income 1,800,000

    2. To record the share in cash dividend:


    Cash (30% x 5,000,000) 1,500,000
    Investment in associate 1,500,000

    3. To record the amortization of the excess attributable to


    the equipment:
    Investment income 200,000
    Investment in associate 200,000
    (1,000,000 / 5 years)

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