Ayayai Corporation purchased a 20% interest in Moss Inc. for $300. This investment gave Ayayai significant influence over Moss. During the year, Moss earned net income of $15 and paid dividends of $5. Assuming the purchase price was equal to 20% of Moss’s net carrying amount when it was acquired.Prepare Ayayai’s journal entries related to this investment using the equity method. Ayayai applies IFRS. (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.)Account Titles and ExplanationDebitCreditenter an account title to record investment purchaseenter a debit amountenter a credit amountenter an account title to record investment purchaseenter a debit amountenter a credit amount(To record investment purchase) enter an account title to record investment incomeenter a debit amountenter a credit amountenter an account title to record investment incomeenter a debit amountenter a credit amount(To record investment income) enter an account title to record collection of dividendenter a debit amountenter a credit amountenter an account title to record collection of dividendenter a debit amountenter a credit amount(To record collection of dividend)

Equity method is the method which is defined as the procedure of treating the investments in linked…

Answered: Ayayai Corporation purchased a 20%…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter18: Comparative Forms Of Doing Business

Section: Chapter Questions

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Ayayai Corporation purchased a 20% interest in Moss Inc. for $300. This investment gave Ayayai significant influence over Moss. During the year, Moss earned net income of $15 and paid dividends of $5. Assuming the purchase price was equal to 20% of Moss’s net carrying amount when it was acquired.

Prepare Ayayai’s journal entries related to this investment using the equity method. Ayayai applies IFRS. (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.)

Account Titles and Explanation	Debit	Credit
enter an account title to record investment purchase	enter a debit amount	enter a credit amount
enter an account title to record investment purchase	enter a debit amount	enter a credit amount
(To record investment purchase)
enter an account title to record investment income	enter a debit amount	enter a credit amount
enter an account title to record investment income	enter a debit amount	enter a credit amount
(To record investment income)
enter an account title to record collection of dividend	enter a debit amount	enter a credit amount
enter an account title to record collection of dividend	enter a debit amount	enter a credit amount
(To record collection of dividend)

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