At the end of 2018, a parent company, P plc, with one subsidiary, had a holding representing
Question:
At the end of 2018, a parent company, P plc, with one subsidiary, had a holding representing 10% of the equity of R Ltd, a clothing company. It had cost £96,000 when purchased at the start of 2017. At the time of that investment, R Ltd had net assets of £72,000 which increased to £1,008,000 by the end of that year. At the start of the current year, the investment was increased by a further 11% of the equity at a cost of £132,000.
Required:
(a) How would the investment be shown in the financial statements if it were treated as an investment, i.e. as neither an associate nor as a subsidiary?
(b) How would the investment be shown in the financial statements if it were treated as an associate?
Step by Step Answer:
Frank Woods Business Accounting Volume 2
ISBN: 9781292085050
13th Edition
Authors: Frank Wood, Alan Sangster