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Rasor Inc Reports Under IFRS and Recently Invested $50,750 to Obtain

question 13

Essay

Rasor Inc. reports under IFRS and recently invested $50,750 to obtain 40% ownership in Ivan. Tenor owns 60% of Ivan. However, all major strategic decisions require the unanimous consent of both Rasor and Tenor. The agreement stipulates that both Rasor and Tenor have rights over the net assets of Ivan.
The balance of the Rasor's investment in Ivan was $50,750 at January 1, 20X3. During the next three years, Ivan reported the following net earnings (losses)and dividends paid.
$\begin{array}{|l|r|r|} \hline& \text { Net earnings (loss) } & \text { Dividends paid } \\& \$ & \$ \\\hline 20X3 & 135,600 & 120,000 \\\hline 20X4 & 15,700 & 120,000 \\\hline 20X5 & (103,400) & 0 \\\hline\end{array}$ Required:
A)Explain the two types of joint arrangements discussed in IFRS. How is each of these types of investments recognized in the accounts under IFRS? What type is Rasor's investment in Ivan and why? What accounting method is used by Rasor to recognize this investment?
B)Calculate the balance of the Investment in Ivan account at December, 31 20X5.

Definitions:

Geographical Markets

Areas or locations where products or services are marketed, each with its own set of customers with distinct needs and characteristics.

Pharmaceutical Companies

Businesses licensed to research, develop, market, and distribute drugs in the healthcare sector, often focusing on novel or generic drug manufacturing.

BRIC Countries

An acronym for Brazil, Russia, India, and China, referring to rapidly developing countries considered as emerging markets or economic giants.

Product Life Cycle

The stages a product goes through from development and introduction to the market, through growth, maturity, and decline.