Ronen Corporation owns 35% of the outstanding voting shares of Western Communications Inc.Over which it exerts significant influence.The carrying value of its investment as at October 31,2009 was $3,750,000.Ronen has now designated its investment in Western as FVTPL as a result of the open market purchase of a 51% interest in Western by Overhaul Corp.Western is in financial distress.The market value of Ronen's 35% interest is now $2,000,000.
Required:
(a)What is the accounting result of a change from the equity method of accounting to FVTPL;
(b)Do any journal entries need to be recorded by Ronen as a result of this change? If so,what is the entry?

Question

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The Answer of Ronen Corporation owns 35% of the outstanding voting shares of Western Communications Inc.Over which it exerts significant influence.The carrying value of its investment as at October 31,2009 was $3,750,000.Ronen has now designated its investment in Western as FVTPL as a result of the open market purchase of a 51% interest in Western by Overhaul Corp.Western is in financial distress.The market value of Ronen's 35% interest is now $2,000,000.
Required:
(a)What is the accounting result of a change from the equity method of accounting to FVTPL;
(b)Do any journal entries need to be recorded by Ronen as a result of this change? If so,what is the entry?

Ronen Corporation Owns 35% of the Outstanding Voting Shares of Western