QUESTION 2 (a) On 1 January 2021, HS Ltd acquired 400,000 out of the 1 million...

 

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QUESTION 2 (a) On 1 January 2021, HS Ltd acquired 400,000 out of the 1 million ordinary shares in Alga Ltd for $500,000. At the end of the financial year on 31 December 2021, Alga Ltd reported a net profit of $200,000. The market value of Alga Ltd shares declined to $1.05 per share. On 23 February 2022, Alga Ltd declared a cash dividend of 5% ($0.05 per ordinary share) which would be paid on 5 May 2022. On 10 May 2022, HS Ltd disposed of 100,000 shares in Alga Ltd at $1.60 per share. Ignored brokerage fee and all other related costs. (b) REQUIRED: i. ii. Indicate the relationship between HS Ltd and Alga Ltd and how it arises. (2 marks) Show the journal entries to record the above transactions in the book of HS Ltd. (18 marks) List out THREE different forms of Joint Ventures (JV) and show the main different among the three forms of JV. (5 marks) QUESTION 2 (a) On 1 January 2021, HS Ltd acquired 400,000 out of the 1 million ordinary shares in Alga Ltd for $500,000. At the end of the financial year on 31 December 2021, Alga Ltd reported a net profit of $200,000. The market value of Alga Ltd shares declined to $1.05 per share. On 23 February 2022, Alga Ltd declared a cash dividend of 5% ($0.05 per ordinary share) which would be paid on 5 May 2022. On 10 May 2022, HS Ltd disposed of 100,000 shares in Alga Ltd at $1.60 per share. Ignored brokerage fee and all other related costs. (b) REQUIRED: i. ii. Indicate the relationship between HS Ltd and Alga Ltd and how it arises. (2 marks) Show the journal entries to record the above transactions in the book of HS Ltd. (18 marks) List out THREE different forms of Joint Ventures (JV) and show the main different among the three forms of JV. (5 marks)

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ii Prepare the journal entries in the books of HS Ltd Date Account Dr Cr 20210101 Stock investmentAlga Ltd 500000 Cash 500000 To record purchase of sh... View the full answer