Chapter 9
Investments
464
AP-9B (
3
)
On January 31, 2016, Alberta Holding purchased 30% of the 800,000 outstanding common
shares from Brain Company and paid $720,000 in cash. Alberta Holding is aiming to set up a
strategic partnership with Brain Company to explore overseas markets. Alberta’s year-end is
on December 31. Alberta Holding follows IFRS and the following activities occurred in regards
to this investment during 2016.
1) Brain Company recorded a net income of $689,000 for its year ended on October 1, 2016.
2) On December 1, 2016, Brain Company paid cash dividends of $200,000 .
Required
a) Prepare journal entries to record the acquisition of Brain Company’s common shares.
b) Prepare journal entries to record revenue of investment from Brain Company on
October 1, 2016.
c) Prepare journal entries to record the receipt of cash dividends on December 1, 2016.
Date
Account Title and Explanation
Debit
Credit
