11.6 ABC Company had the following transactions with XYZ Company over a two-year period: Year 2003 1.

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11.6 ABC Company had the following transactions with XYZ Company over a two-year period:

Year 2003 1. On 1 January, ABC purchased a 35 per cent interest in XYZ for EUR 700,000 cash.

2. XYZ had net profit of EUR 70,000.

3. At year-end, XYZ paid its shareholders dividends of EUR 60,000.

Year 2004 1. ABC purchased on 1 January an additional 5 per cent of XYZ’s shares for EUR 75,000 cash.

2. XYZ declared dividends of EUR 100,000.

3. XYZ had net profit of EUR 150,000 for the year.

4. At year-end, XYZ paid its shareholders the dividends declared.

Determine the carrying value of the investment in XYZ in the balance sheet of ABC as at 1 January 2003, 31 December 2003 and 2004.

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Financial Accounting An International Approach

ISBN: 9780273693192

1st Edition

Authors: Prof Jagdish Kothari, Elisabetta Barone, Barone Kothari

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