Alpha Ltd acquired 30% of the voting shares of Beta Ltd on 1 July 2021 for...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Alpha Ltd acquired 30% of the voting shares of Beta Ltd on 1 July 2021 for $200 000. This acquisition resulted in Alpha Ltd having significant influence over Beta Ltd. At the date of acquisition, the shareholder's equity of Beta is as follows: Share capital 350 000 Retained profits 50 000 400 000 The following information relates to Beta Ltd as at 30 June 2022, the end of financial year FY2022: Profit for FY2022 100 000 60 000 Dividend paid out of the profit of FY2022 Asset revaluation reserve 20 000 Additional information: • Mu Ltd is 80% owned by Alpha Ltd and is Alpha's subsidiary. • During FY2022, Beta sold $100 000 of inventories to Mu Ltd and made profit of $50 000. As at 30 June 2022, 10% of the inventories were still held by Mu Ltd. Required: a) Prepare journal entries for Alpha Ltd in FY2022 to account for its investment in Beta Ltd using the Equity Method. Use the Reclassification Method to account for the profit and dividends that Alpha shares from Beta. Note 1) Use the provided journal entry template to enter your answer. 2) Workings/calculations or narrations are NOT required. 3) The template should provide enough space. However, if you find the space is insufficient in the template or encounter a table formatting issue, write your journal entries below the template and ensure labelling DR or CR. b) Describe the criteria used to identify subsidiaries and the criteria used to identify associates. Alpha Ltd acquired 30% of the voting shares of Beta Ltd on 1 July 2021 for $200 000. This acquisition resulted in Alpha Ltd having significant influence over Beta Ltd. At the date of acquisition, the shareholder's equity of Beta is as follows: Share capital 350 000 Retained profits 50 000 400 000 The following information relates to Beta Ltd as at 30 June 2022, the end of financial year FY2022: Profit for FY2022 100 000 60 000 Dividend paid out of the profit of FY2022 Asset revaluation reserve 20 000 Additional information: • Mu Ltd is 80% owned by Alpha Ltd and is Alpha's subsidiary. • During FY2022, Beta sold $100 000 of inventories to Mu Ltd and made profit of $50 000. As at 30 June 2022, 10% of the inventories were still held by Mu Ltd. Required: a) Prepare journal entries for Alpha Ltd in FY2022 to account for its investment in Beta Ltd using the Equity Method. Use the Reclassification Method to account for the profit and dividends that Alpha shares from Beta. Note 1) Use the provided journal entry template to enter your answer. 2) Workings/calculations or narrations are NOT required. 3) The template should provide enough space. However, if you find the space is insufficient in the template or encounter a table formatting issue, write your journal entries below the template and ensure labelling DR or CR. b) Describe the criteria used to identify subsidiaries and the criteria used to identify associates.
Expert Answer:
Answer rating: 100% (QA)
a The inclusion of an investment journal by Alpha Ltd under the Equity Method Carrying Value Date Details Amt Dr Amt Cr Equity Investment Method Year ... View the full answer
Related Book For
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott
Posted Date:
Students also viewed these accounting questions
-
From the following details calculate the number of equity shares of Rs. 10 each to be issued in order to redeem the preference shares. 12% Redeemable preference shares of Rs. 10 each = Rs. 150,000...
-
Swan Ltd purchased vintage equipment on 1 July 2021 for $119 400 cash. Transport and installation costs of $12 600 were paid on 5 July 2021. Useful life and residual value were estimated to be 10...
-
On 1 July 2021 Brown Ltd, an Australian company, provides some consulting advice to the California Tropicana Company, an American organisation for an agreed fee of US$150,000. The amount is paid into...
-
Computer Technologies provides maintenance service for computers and office equipment for companies throughout the Northeast. The sales manager is elated because she closed a $300,000 three-year...
-
Each of the following managers has been given certain decision- making authority. Classify each manager according to the type of responsibility center he or she manages. 1. Manager of the...
-
Find the curvature of r(t) = (2 sin t, cos 3t, t) at t = /3 and t = /2.
-
What is the frequency range of a seismometer?
-
In 2012, Grissom Company had a break-even point of $350,000 based on a selling price of $7 per unit and fixed costs of $105,000. In 2013, the selling price and the variable cost per unit did not...
-
Suppose that you have a short position in 10 3-month call option contracts. How do you hedge this long position in calls using 3-month puts? Should you long or short the puts? And how many put...
-
Income statement and balance sheet data for Great Adventures, Inc., are provided below. As you can tell from the financial statements, 2025 was an especially busy year. Tony and Suzie were able to...
-
Billy Helm and his wife Betty were the directors, officers, and 54% shareholders of TimeNews, an Indiana corporation that published a magazine in the city of Bloomsdale. Olaf Oshe, who owned the...
-
Rephrase this essay Use of Generative AI (such as ChatGPT) is NOT permitted for this assignment. Jewish In Jewish tradition, sin is often understood as transgressions against God's commandments,...
-
Make a long and detailed essay on Cormac McCarthy's The Road. The essay should be based on the following prompt: Throughout Cormac McCarthy's The Road , the man reassures his son that "we're the...
-
Use the Normal Curve Distribution attached to guide you in answering the following questions: 1. Sara's score on the standardized math test fell between the mean and one standard deviation above the...
-
How do you think children and childhood is positioned as a consumer moment? How has children's media and entertainment industry shifted the way that consumer culture operates? Has is shifted the way...
-
https://www.youtube.com/watch?v=2g88Ju6nkcg Question: How does the "saying" and the "said" influence this conversation? What is the role of organization to foster diversity and inclusion? What is the...
-
Consider the differential equation(1)?12 x + yy?= 12 y + x.a) Determine the general solution of (1).b) Find the particular solution y = y(x) with initial value y(1) =?12.c) Determine Q.1 Consider the...
-
X-1 Find the domain of the function f(x) : x 1 2 - O (-00, -1) U (-1, ) O (-00, 1) U (1, ) O -00, -1) U (-1, 1) U (1, 0) O (- 1, 1)
-
IAS 10 deals with events after the reporting period. Required: (a) Define the period covered by IAS 10. (b) Explain when should the financial statements be adjusted? (c) Why should non-adjusting...
-
Sunhats Ltd manufactures patent hats. It carries inventor y of these and sells to wholesalers and retailers via a number of salespeople. The following expenses are charged in the profit and loss...
-
You work for Euroc, a limited liability company, which seeks growth through acquisitions. You are a member of a team that is investigating the possible purchase of Choggerell, a limited liability...
-
Listed below are selected financial data from the accounting records of Retro Furniture Pty Ltd for the year ended 30 June 2022. Required Prepare an income statement for the year ended 30 June 2025....
-
Smart Manufacturing Systems Pty Ltd provides the following information. Required (a) Calculate total manufacturing costs for the period ending 30 June 2025. (b) Calculate cost of goods manufactured...
-
Below is selected financial data extracted from the accounting records of Sustainable Clothing Pty Ltd for the year ended 30 June 2025. Required (a) Prepare a cost of goods manufactured statement for...
Study smarter with the SolutionInn App