Question
Ayayai Corp. is facing a decision as to whether to purchase 40% of Kyla Corp.s shares for $1.20 million cash, giving Ayayai significant influence over
Ayayai Corp. is facing a decision as to whether to purchase 40% of Kyla Corp.s shares for $1.20 million cash, giving Ayayai significant influence over the investee company, or 60% of Kylas shares for $1.80 million cash, making Kyla a subsidiary company. The book value of Kylas net assets is $3.00 million (assets are $10 million and liabilities are $7.00 million).
How will this investment affect Ayayais statement of financial position if Ayayai acquires a 60% interest, assuming Ayayai applies IFRS? Indicate the immediate effect on Ayayais total assets, total liabilities, and shareholders equity. (Enter answers in millions to 2 decimal places, e.g. 1.25. Do not leave any answer field blank. Enter 0 for amounts.)
Assets Liabilities Shareholders' equity Invest in Associate + 6 4.2 + 1.8 million million million Cash 1.8 million No Effect o million No Effect 0 million X X + 4.2 4.2 + 1.8 million million million
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