QUESTION #$4(15$ Marks, $36$ Minutes$)$

Required:

The following is a list of different types of investments;

$($i$)$ Control Investment

$($ii$)$ Passive Investment

$($iii$)$ Joint Control

$($iv$)$ Significant Influence Investment

For each of the investments above, simply pick an appropriate accounting treatment from the list below. You do not need to explain "Why"!

Simply match the investments above with the accounting treatments below. $(4$ marks$)$

$($a$)$ Cost Method

$($b$)$ Equity Method

$($c$)$ Consolidation

$($d$)$ Proportionate Consolidation

Describe some factors that may indicate that "Control" exists. $(3$ Marks$)$

Describe some factors that may indicate that "Significant influence" exists? $(3$ marks$)$

Consider the following facts:

Emran Ltd$.$ buys $20\%$ of the outstanding shares of Worldco Telecommunications for $$250,000$ on January $1,2003.$

Worldco reports earnings of $$137,500$ for the year ended December $31,2003.$

$*$ Worldco paid dividends totaling $$60,000$ to all of it's shareholders for the year ended December $31,2003.$

It has been determined that Emran will account for it's investment in Worldco using the equity method $($i$.$e$.20\%$ investment plus other factors that indicate significant influence exists$).$

Calculate the amount that Emran would report for it's investment in Worldco as at December $31,2003.$ Show all calculations. $(5$ marks$)$