Portland Limited bought 30% of the Ordinary shares in Ochi Limited on 1 April 2019 at...

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Portland Limited bought 30% of the Ordinary shares in Ochi Limited on 1 April 2019 at a price of $4.90 per share. The share capital of Negril Limited was $24,000,000 of $4 each For the year ended 31 December 2018 Negril Limited made a net profit of $1,600,000. You may assume that profit accrued evenly throughout the year. At year end the directors of Montego Limited determined that the investment in Negril Limited was impaired by 20% of its initial cost. REQUIRED: (1) Explain how Ochi Limited should be treated in the consolidated accounts? (5marks) (2) Using the equity method of accounting calculate, the value at which Ochi Limited should be reported in the consolidated statement of financial position, for the Portland Limited Group. (7 marks) Portland Limited bought 30% of the Ordinary shares in Ochi Limited on 1 April 2019 at a price of $4.90 per share. The share capital of Negril Limited was $24,000,000 of $4 each For the year ended 31 December 2018 Negril Limited made a net profit of $1,600,000. You may assume that profit accrued evenly throughout the year. At year end the directors of Montego Limited determined that the investment in Negril Limited was impaired by 20% of its initial cost. REQUIRED: (1) Explain how Ochi Limited should be treated in the consolidated accounts? (5marks) (2) Using the equity method of accounting calculate, the value at which Ochi Limited should be reported in the consolidated statement of financial position, for the Portland Limited Group. (7 marks)

Answer rating: 100% (QA)

1 Explain how Ochi Limited should be treated in the consolidated accounts Ochi Limited will not be c... View the full answer