Ayayai Corporation purchased a 25% interest in Krov Corporation on January 2, 20

Question

Ayayai Corporation purchased a 25% interest in Krov Corporation on January 2, 2017, for $1,100. At that time, the carrying amount of Krov's net assets was $4,100. Any excess of the cost of the investment over Ayayai's share of Krov's carrying amount can be attributed to unrecorded intangibles with a useful life of 20 years. Krov declared and paid a dividend of $17 and reported net income of $60 for its year ended December 31, 2017. Prepare Ayayai's 2017 entries to record all transactions and events related to the investment in its associate. Assume that Ayayai is a publicly accountable enterprise that applies IFRS. (Round answer to 0 decimal places, e.g. 5,275. 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.) Date Account Titles and Explanation Debit Credit January 2 # Cash Investment in Associate 4 Dividend received from associate: anuary 2 Ayayai's share of associate's net income: December 31 Amortization of Krov's unrecognized intangible assets: December 31

Explanation / Answer

1) investment in associate a/c. Dr. 1100

To Bank a/c. 1100

( Being investment made in associate)

2) investment in associate a/c. Dr. 43

Profit and loss a/c. 43

3)profit and loss a/c. Dr. 3.75

Investment in associate a/c 3.75

(Amortization of patent cost)

4) Bank a/c Dr. 17

Profit and loss a/c. 17

(Being dividend received from associate)

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