Please provide detail solutions. On January 1, 2017, Oriole Corporation purchase

Question

Please provide detail solutions.

On January 1, 2017, Oriole Corporation purchased 22% of the outstanding voting shares in WLT Corporation or $1,270,000. At the time of purchase, w T's net assets were undervalued by S 09 and had a remaining useful life of 12 years. Both companies had a December 31 year-end. At the end of 2017, wLT reported a net income of $343,000. Also on December 31, 2017, the fair value of the investment in WLT shares was $1,393,000. On January 10, 2018, WLT paid a cash dividend. Oriole's ownership entitles it to $22,220 of the dividend. Prepare the journal entries on the books of Onole Corporation to record the transactions described above, assuming that the 22% nterest in WLT does represent signif cant influence Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) DateAccount Titles and Explanation Credit (To record investment income earned.) To record amortization of undervalued assets.) SHOW LIST OF ACCOUNTS

Explanation / Answer

Entry to record the investment made

Entry to record investment income earned

Entry to record receipt of cash dividend

To record amortization of undervalued assets

Amortization amount = Amount undervalued / Remaining life of the assets = $87,709 / 12 = $7,309.

Date Account Title Debit credit Jan.1, 2017 Investment in WLT Corporation 1,270,000 Cash 1,270,000 (To record invesment made in WLT corporation)

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