Orange Inc is a public company with December 31 year-end. The company acquires 7000 shares of Lemon Inc at a cost of RO 25/share. On January 1, 2018 transaction cost totals RO 1350, and Orange Inc chooses to include them in the cost of the investment. The investment does not provide Orange Inc with influence over or control of Lemon Inc. Orange classifies them as available for sale investments.

During the year ending December 31, 2018, Lemon Inc declares and pays a dividend of RO 1.50/share. The shares of Lemon Inc have a quoted market price that is established in an active market. On December 31, 2018, the Fair Value of Lemon Inc shares have declined to RO 20/share.

On March 1, 2019, Orange Inc sells all of the shares of Lemon Inc for RO 30/share. The transaction cost of disposal is RO 2150.

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Question 31

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Calculate the value of investments purchased by Orange Inc on January 1, 2018. (Refer to case 1)

a.RO 176,350

b. RO 167,350

c. None of the given option

d. RO 1,350

Answer rating: 100% (QA)

Answer 31 Value of investment ... View the full answer