At the end of 2024, BrightWave Ltd, with one subsidiary, had a holding representing 18% of the
Question:
At the end of 2024, BrightWave Ltd, with one subsidiary, had a holding representing 18% of the equity of Silver Ltd, a mining equipment company. It had cost $88,000 when purchased at the start of 2023. At the time of that investment, Silver Ltd had net assets of $700,000 which increased to $1,000,000 by the end of that year. At the start of the current year, the investment was increased by a further 13% 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 financial impact on BrightWave Ltd if Silver Ltd issues new shares to the market.
Frank Woods Business Accounting Volume 2
ISBN: 9781292085050
13th Edition
Authors: Frank Wood, Alan Sangster