On January 1, 2023, Sheffield Corporation purchased 20% of the common shares of Martz Limited for $197,000. Martz shares are not traded in an active market. The carrying amount of Martz's net assets was $860,000 on that date. Any excess of the purchase cost over Sheffield's share of Martz's carrying amount is attributable to unrecorded intangibles with a 20-year life. During the year, Martz earned net income and comprehensive income of $77,000 and paid dividends of $15,400. The investment in Martz had a fair value of $202,000 at December 31, 2023. During 2024, Martz incurred a net loss and comprehensive loss of $82,000 and paid no dividends. At December 31, 2024, the fair value of the investment was $141,000 and the recoverable amount was $150,000. Assume that Sheffield follows IFRS. (a1)
On January 1, 2023, Sheffield Corporation purchased 20% of the common shares of Martz Limited for $197,000. Martz shares are not traded in an active market. The carrying amount of Martz's net assets was $860,000 on that date. Any excess of the purchase cost over Sheffield's share of Martz's carrying amount is attributable to unrecorded intangibles with a 20-year life. During the year, Martz earned net income and comprehensive income of $77,000 and paid dividends of $15,400. The investment in Martz had a fair value of $202,000 at December 31, 2023. During 2024, Martz incurred a net loss and comprehensive loss of $82,000 and paid no dividends. At December 31, 2024, the fair value of the investment was $141,000 and the recoverable amount was $150,000. Assume that Sheffield follows IFRS. (a1)
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 35P
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Question
choose from the following accounts:
Accumulated Other Comprehensive Income
Allowance for Investment Impairment
Bond Investment at Amortized Cost
Cash
Commission Expense
Dividends Receivable
Dividend Revenue
FV-NI Investments
FV-OC|Investments
Gain on Disposal of Investments - FV-NI
Gain on Disposal of Investments - FV-OCI
Gain on Sale of Investments
GST Receivable
Interest Expense
Interest Income
Interest Payable
Interest Receivable
Investment in Associate
Investment Income or Loss
Loss on Discontinued Operations
Loss on Disposal of Investments FV-NI
Loss on Disposal of Investments FV-OCI
Loss on Impairment
Loss on Sale of Investments
No Entry
Note Investment at Amortized Cost
Other Investments
Recovery of Loss from Impairment
Unrealized Gain or Loss
Unrealized Gain or Loss - OCI
Transcribed Image Text:On January 1, 2023, Sheffield Corporation purchased 20% of the common shares of Martz Limited for $197,000. Martz shares are not
traded in an active market. The carrying amount of Martz's net assets was $860,000 on that date. Any excess of the purchase cost over
Sheffield's share of Martz's carrying amount is attributable to unrecorded intangibles with a 20-year life. During the year, Martz
earned net income and comprehensive income of $77,000 and paid dividends of $15,400. The investment in Martz had a fair value of
$202,000 at December 31, 2023. During 2024, Martz incurred a net loss and comprehensive loss of $82,000 and paid no dividends. At
December 31, 2024, the fair value of the investment was $141,000 and the recoverable amount was $150,000. Assume that Sheffield
follows IFRS.
(a1)
Prepare all relevant journal entries related to Sheffield's investment in Martz for 2023 and 2024, assuming this is its only
investment and Sheffield cannot exercise significant influence over Martz's policies. Sheffield accounts for this investment using
the FV-NI model. (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 O for the amounts. List all debit entries before credit entries.)
Account Titles and Explanation
2023:
(To record investment purchase)
(To record receipt of dividend)
(To record fair value adjustment)
2024:
Debit
Credit
||
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