At the end of 2023, CrystalWave Ltd, with one subsidiary, had a holding representing 23% of the
Question:
At the end of 2023, CrystalWave Ltd, with one subsidiary, had a holding representing 23% of the equity of Bright Ltd, a lighting solutions company. It had cost $90,000 when purchased at the start of 2022. At the time of that investment, Bright Ltd had net assets of $800,000 which increased to $1,200,000 by the end of that year. At the start of the current year, the investment was increased by a further 12% of the equity at a cost of $130,000.
(a) How would the investment be shown in the financial statements if it were treated as a trade investment? (b) How would the investment be shown in the financial statements if it were treated as an associated undertaking? (c) Calculate the impact on CrystalWave Ltd's equity if Bright Ltd declares a substantial dividend.
Frank Woods Business Accounting Volume 2
ISBN: 9781292085050
13th Edition
Authors: Frank Wood, Alan Sangster