Problem
On January 1, 2019, Chelle Corporation purchased 15 per cent outstanding shares of Yutah Corporation for $430,000. From Chelle's perspective, Yutah was a fair value through profit or loss (FVTPL) investment. The fair value of Chelle's investment was $498,000 at December 31, 2019.
On January 1, 2020, Chelle purchased an additional 25 per cent of Yutah's shares for $800,000. The second share purchase allows Chelle to exert significant influence over Yutah. The fair value of Chelle's investment was $1,400,000 at December 31, 2020.
During the two years Yutah reported the following results:
|
Net Income
|
Dividends Declared and Paid
|
|
2019
|
$300,000
|
$140,000
|
|
2020
|
$450,000
|
$210,000
|
Task
Determine the balance of Chelle's Investment in Yutah's account as of Dec 31, 2020. Show all your work beginning with the purchase on Jan 1, 2019.