On January 3, 2017, Pina Colada Limited purchased 1,910 (19%) of the common shares of Sonja Corp. for $329,840. The following information is provided about the identifiable assets and liabilities of Sonja at the date of acquisition:
| |
|
Carrying Amount |
|
Fair Value |
Assets not subject to depreciation
|
|
$504,000 |
|
$504,000
|
Assets subject to depreciation (10 years remaining)
|
|
814,000
|
|
1,044,000 |
Total identifiable assets
|
|
1,318,000
|
|
1,548,000 |
Liabilities
|
|
82,000 |
|
82,000
|
During 2017, Sonja reported the following information on its statement of comprehensive income:
Income before discontinued operations
|
|
$172,000
|
Discontinued operations (net of tax)
|
|
(57,400 |
) |
Net income and comprehensive income
|
|
114,600 |
Dividends declared and paid by Sonja, November 15, 2017
|
|
72,000 |
Assume that the 19% interest is sufficient to make Sonja an associate of Pina Colada, and that Pina Colada is required to apply IFRS for its financial reporting. The fair value of Sonja's shares at December 31, 2017, is $152 per share.
Prepare the journal entry to record Pina Colada's purchase of the Sonja shares on January 3, 2017. (Hint: Any unexplained payment represents unrecognized goodwill of Sonja.)
Prepare all necessary journal entries associated with Pina Colada's investment in Sonja for 2017. Depreciable assets are depreciated on a straight-line basis. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)