Paragraph (B) Bromley Ltd acquired a 20% interest in Coverley Ltd for $150 000 cash on...

 

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Paragraph (B) Bromley Ltd acquired a 20% interest in Coverley Ltd for $150 000 cash on 1 July 2018. The directors of Bromley Ltd believe this investment represents significant influence over the investee. The equity of Coverley Ltd at the acquisition date was: Share capital Retained earnings $ 30000 120 000 All the identifiable assets and liabilities of Coverley Ltd were recorded at fair value. Profits and dividends for the years ended 30 June 2019 to 2020 were as follows: Dividend Paid Profit Dividend Declared Income tax before tax expense 20 000 30 000 2019 160 000 50 000 20 000 2020 120 000 50 000 Prepare journal entries in the records of Bromley Ltd for the years ended 30 June 2019 and 30 June 2020 in relation to its investment in the associate, Coverley Ltd. Assume Bromley Ltd does not prepare 1. consolidated financial statements. Explain the differences in application of the equity method of accounting if Bromley Ltd is a parent preparing consolidated financial statements. 2. hp Paragraph (B) Bromley Ltd acquired a 20% interest in Coverley Ltd for $150 000 cash on 1 July 2018. The directors of Bromley Ltd believe this investment represents significant influence over the investee. The equity of Coverley Ltd at the acquisition date was: Share capital Retained earnings $ 30000 120 000 All the identifiable assets and liabilities of Coverley Ltd were recorded at fair value. Profits and dividends for the years ended 30 June 2019 to 2020 were as follows: Dividend Paid Profit Dividend Declared Income tax before tax expense 20 000 30 000 2019 160 000 50 000 20 000 2020 120 000 50 000 Prepare journal entries in the records of Bromley Ltd for the years ended 30 June 2019 and 30 June 2020 in relation to its investment in the associate, Coverley Ltd. Assume Bromley Ltd does not prepare 1. consolidated financial statements. Explain the differences in application of the equity method of accounting if Bromley Ltd is a parent preparing consolidated financial statements. 2. hp

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Journal Entries For the year ended 30 June 2019 Particulars Debit Credit Investment in Coverley 1500... View the full answer