Aragorn Ltd paid $1,500,000 in cash for 20% share of Arwen Ltd at beginning of the...

 

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Aragorn Ltd paid $1,500,000 in cash for 20% share of Arwen Ltd at beginning of the 2022 financial year. As at the end of 2022 financial year, a valuation model suggested that Arwen Ltd was worth $6,000,000. Arwen Ltd also made a loss of $200,000 but revalued its buildings upwards by $500,000. wwww Required: a) b) Record the journal entries and equity accounting adjustments that relates to the above series of events if Aragorn Ltd accounted for its investment in Arwen Ltd using the equity method of accounting (6 marks) c) Accounts Investment in Associate Cash ACCT702 S1 2022 Debit $ Accounts 1,500,000 Debit $ Credit $ Student ID Number: Student Name: Record the journal entries that relates to the above series of events if Aragorn Ltd accounted for its investment in Arwen Ltd as a financial instrument (4 marks) 1,500,000 Credit $ Page 8 of 12 Explain whether the equity method of accounting or financial instrument accounting would provide Aragorn Ltd with a higher Net Profit for its investments. Support your answer with your numbers in (a) and (b). (3 marks) Aragorn Ltd paid $1,500,000 in cash for 20% share of Arwen Ltd at beginning of the 2022 financial year. As at the end of 2022 financial year, a valuation model suggested that Arwen Ltd was worth $6,000,000. Arwen Ltd also made a loss of $200,000 but revalued its buildings upwards by $500,000. wwww Required: a) b) Record the journal entries and equity accounting adjustments that relates to the above series of events if Aragorn Ltd accounted for its investment in Arwen Ltd using the equity method of accounting (6 marks) c) Accounts Investment in Associate Cash ACCT702 S1 2022 Debit $ Accounts 1,500,000 Debit $ Credit $ Student ID Number: Student Name: Record the journal entries that relates to the above series of events if Aragorn Ltd accounted for its investment in Arwen Ltd as a financial instrument (4 marks) 1,500,000 Credit $ Page 8 of 12 Explain whether the equity method of accounting or financial instrument accounting would provide Aragorn Ltd with a higher Net Profit for its investments. Support your answer with your numbers in (a) and (b). (3 marks)

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a Journal entry for Aragorn Ltd for Investment in Arwen Ltd Debit Cash 1500000 Credit Investment in ... View the full answer