(Answered) Question - maui enterprises inc acquired 15 of the 100000

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Question - Maui Enterprises Inc. acquired 15% of the 100,000 outstanding common shares of Wailea Ltd. on January 1, 2016 for a cash consideration of $150,000 and a further 10% of the company's common shares a year later for $120,000. On July 1, 2017, Maui Enterprises sold half their holding in Wailea for proceeds of $150,000.

Wailea earned income of $150,000 in 2016 and $180.000 in 2017 (evenly over both years) and paid a regular semi-annual dividend of $60,000 in June and December each year.

The investment in Wailea is accounted for at fair value through other comprehensive income throughout the period. The company's shares were trading for $11 at the end of 2016 and $12.50 at the end of 2017.

Required: Prepare dated journal entries for Maui Enterprises for 2016 and 2017 to account for its investment in Wailea and any related income therefrom. Gains and losses are transferred from Accumulated Other Comprehensive Income to Retained Earnings when realized.

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