e Company, holding 210,000 shares of Ivan e\'s common stock on December 31, 2016

Question

e Company, holding 210,000 shares of Ivan e's common stock on December 31, 2016. The investment account had the Sarasota Corp. was a 30% owner of Ivan following entries. Investment in Ivanhoe $160,000 240,000 $3,130,000 12/6/15 Dividend r 1/1/15 Cost 12/31/15 Share of income 12/31/16 Share of income received 390,000 12/5/16 Dividend received 520,000 On January 2, 2017, Sarasota sold 147.000 shares of Ivanhoe for $3,510,000, thereby losing its significant influence. During the year 2017, Ivanhoe experienced the following results of operations and paid the following dividends to Sarasota. Ivanhoe Income (Loss) Dividends Paid to Sarasota 300,000 $49,000 2017 At December 31, 2017, the fair value of Ivanhoe shares held by Sarasota is $1,640,000. This is the first reporting date since the January 2 sale. (b) Compute the carrying amount of the investment in Ivanhoe as of December 31, 2017 (prior to any fair value adjustment). Carrying amount account titles are automatically indented when 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.) Debit Credit Account Titles and Explanation Fair Value Adjustment Unrealized Holding Gain or Date Dec. 31, 2017

Explanation / Answer

Cost of the remaining shares % of Holding No of Shares Value Cost Per Share Begning Balance as on 01/01/2017 30%                           210,000           3,640,000                    17.33 No of shares sold 21%                           147,000           2,548,000                    17.33 Balance as on 02-Jan-2017 9%                             63,000           1,092,000                    17.33 Carrying Amount                       1,092,000 Since holding is is 9% and sarasota does not have any influence on the management of the company , the dividend recevied will be charged to P&L account and nothing to do with the income earned by the Ivanhoe Date Accounts Titles & explaination Debit Credit Dec 31,2017 Fair Value Adjusment                           548,000 Unrealised Holding Gain               548,000 Calculation of the Gain Fair Value                                            1,640,000 Book Value                                            1,092,000 Gain                                                548,000

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