Question 2 (6 points) On January 1, 2019 Hammer Ltd. purchased 45,000 of the 150,000...
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Question 2 (6 points) On January 1, 2019 Hammer Ltd. purchased 45,000 of the 150,000 outstanding common shares of Nail Inc. for $295,000 cash. Hammer reports under IFRS and the transaction gives Hammer significant influence over Nail. On January 1 2019, the statement of financial position of Nail Corp showed the following values: Assets - fair value equal to book value $850,000 Liabilities - fair value equal to book value 200,000 Other information for December 31, 2019: Nail Corp earnings for 2019 $750,000 Cash dividends paid by Nail Corp in 2019 150.000 Required: Assume there is no impairment of value Show and label your calculations, a. Calculate the amount of goodwill purchased as at January 1, 2019. (2 Marks) b. Prepare the entries to recognize investment revenue and dividends at December 31 2019, Hammer Inc year end. (4 Marks)
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