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On January 1, 2024, Pearl Corporation acquired another 2,500,000 common shares of Sapphire Company for...

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On January 1, 2024, Pearl Corporation acquired another 2,500,000 common shares of Sapphire Company for $3.80 each. The book values of Sapphire's net assets were equal to fair values except for specialized equipment, which was now understated by $36,000 and had an estimated remaining useful life of 9 years. During 2024, Sapphire Company reported a net income of $190,000 and paid dividends of $14,000. At December 31, 2024, the fair value of Sapphire's shares was $3.60 per share. REQUIRED: Prepare the journal entries on the books of Pearl Corporation for the investment in Sapphire for the 2024 fiscal year. (6 Marks) On January 1, 2024, Pearl Corporation acquired another 2,500,000 common shares of Sapphire Company for $3.80 each. The book values of Sapphire's net assets were equal to fair values except for specialized equipment, which was now understated by $36,000 and had an estimated remaining useful life of 9 years. During 2024, Sapphire Company reported a net income of $190,000 and paid dividends of $14,000. At December 31, 2024, the fair value of Sapphire's shares was $3.60 per share. REQUIRED: Prepare the journal entries on the books of Pearl Corporation for the investment in Sapphire for the 2024 fiscal year. (6 Marks)

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