a.

AL BATINAH POWER owns 40 % of the voting shares of ACWA POWER BARKA and 30 % of OMAN CEMENT. In addition, OMAN CEMENT owns 5 percent of the shares of ACWA POWER BARKA. OMAN CEMENT also owns 10 percent voting shares of AL BATINAH POWER as well.

Briefly explain how AL BATINAH POWER securities should classify and account for its investments in ACWA POWER BARKA and OMAN CEMENT. (5 Marks)

b.

On January 1, 2015, Company A with year-end on December 31 every year has acquired 5 percent of the voting shares of Company B for OMR 2 per share. Company B had total 1,000,000 outstanding shares at that time. The investment is classified as available for sale. Company B Shares are not traded in an active market.

During the year ending December 31, 2015, Company B Net income is Nil and pays dividend of OMR 20,000. During the year ending December 31, 2016 net income is OMR 20,000 but Company B pays dividend of OMR 40,000. On December 31, 2017 there was OMR 30,000 as net income and dividend paid by Company B is OMR 8,000.

Journal entries needs to be passed in the books of Company A for 2015, 2016, and 2017.