Question: On July 1 2014 Munns Corp purchased for cash 25

On July 1, 2014, Munns Corp. purchased for cash 25% of the outstanding shares of Huber Corporation. Both Munns and Huber have a December 31 year end. Huber Corporation, whose common shares are actively traded on the Toronto Stock Exchange, paid a cash dividend on November 15, 2014, to Munns Corp. and its other shareholders. Huber also reported net income for 2014 of $920,000.
(a) Assuming that Munns Corp. follows IFRS, prepare a one-page memorandum on how Munns Corp. should report the above facts on its December 31, 2014 statement of financial position and its 2014 income statement, and also state what additional disclosure might be required in the notes to the financial statements. In your memo, identify and describe the method of valuation that you recommend. If additional information is needed, identify what other information would be necessary or useful. Address your memo to the chief accountant at Munns Corp. and provide reasons for your choices as much as possible.
(b) If Munns reported under ASPE, what other alternatives would be available?

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  • CreatedSeptember 18, 2015
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