Question
a. AL- Habib securities owns 80 % of the voting shares of Nexus Inc. and 55 % of Abacus Inc. In addition, Abacus Inc. owns
a.
AL- Habib securities owns 80 % of the voting shares of Nexus Inc. and 55 % of Abacus Inc. In addition, Abacus Inc. owns 20 percent of the shares of Nexus Inc. In addition to that, Abacus also owns 5 percent voting shares of AL-Habib securities as well.
Briefly explain how AL-Habib securities should classify and account for its investments in Nexus Ltd. And Abacus Ltd.
b.
On January 1, 2016, DHOFAR TOURISM with year-end on December 31 every year has acquired 10 percent of the voting shares of GULF STONES for OMR 0.120 per share. GULF STONES had total 500,000 outstanding shares at that time. The investment is classified as available for sale. GULF STONES Shares are not traded in an active market.
During the year ending December 31, 2016, GULF STONES Net income is OMR 200,000 and pays dividend of OMR 50,000. During the year ending December 31, 2017 there is no net income but still GULF STONES pays dividend of OMR 40,000. On December 31, 2018 the profit is OMR 50,000 but the divided paid is OMR 100,000.
Journal entries are required to be passed in the books of DHOFAR TOURISM for 2016, 2017 and 2018
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