Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

Hi dear helper, Please letting me know how to calculate it(step by step) and give me an explanation about the steps, thanks, I'll give you

Hi dear helper,

Please letting me know how to calculate it(step by step) and give me an explanation about the steps, thanks, I'll give you the thumb!

(If you can't or do not want to, please let someone else do, thanks)

image text in transcribed

On 1 January 2019, AB Ltd. a parent entity, purchased 30% of the voting shares in D Ltd for $350,000. The directors of AB Ltd have formed the opinion that AB Ltd has significant influence over D Ltd. AB Ltd uses the cost method to account for its investment in associates in its single entity financial statements and the equity method in the consolidated financial statements At acquisition date. D Ltd shareholders' equity was represented by: Share capital 500,000 Retained earnings 300,000 Revaluation surplus 200,000 1,000,000 At acquisition date all of D Ltd assets were recorded at fair value except for a patent which had a fair value $50.000 greater than the carrying amount. The remaining life of the patent is 5 years. The following has been extracted from the financial statements of D Ltd for the year ended 31 December 2021: Net profit after tax 50,000 Retained earnings 1 January 2020 380,000 Dividend paid (15,000) Retained earnings 31 December 2021 415,000 Share capital 500,000 Revaluation surplus 250,000 Shareholders' equity 1,165,000 Other information: The company income tax rate is 30% in all periods. The is no change in the AB Ltd shareholding in D Ltd over the relevant periods. Required: Prepare equity accounting adjusting journal entries to account for the D Ltd investment in the AB Ltd consolidated financial statements for the year ended 31 December 2020. The entry to record the tax effect of the temporary difference is not required

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_step_2

Step: 3

blur-text-image_step3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions