Control Alt Design Ltd. acquired 30% of the outstanding ordinary shares of Walter Company on January 1,
Question:
Control Alt Design Ltd. acquired 30% of the outstanding ordinary shares of Walter Company on January 1, 2017, by paying £800,000 for the 45,000 shares. Walter declared and paid £0.30 per share cash dividends on March 15, June 15, September 15, and December 15, 2017. Walter reported net income of £320,000 for the year. At December 31, 2017, the market price of Walter ordinary shares was £24 per share.
Instructions
(a) Prepare the journal entries for Control Alt Design for 2017, assuming Control Alt Design cannot exercise significant influence over Walter. Use the cost method and assume that Walter ordinary shares should be classified as a trading security.
(b) Prepare the journal entries for Control Alt Design for 2017, assuming Control Alt Design can exercise significant influence over Walter. Use the equity method.
(c) Indicate the statement of financial position and income statement account balances at December 31, 2017, under each method of accounting.
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a Jan 1 Share Investments 800000 Cash 800000 Mar 15 Cash 13500 Dividend Revenue 45000 X 030 13500 Ju...View the full answer
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