Question
Mop Ltd acquired a 40 per cent interest in Bucket Ltd on 1 July 2024 for a cash consideration of $824 000. Bucket Ltd's assets
Mop Ltd acquired a 40 per cent interest in Bucket Ltd on 1 July 2024 for a cash consideration of $824 000. Bucket Ltd's assets and liabilities were recorded at fair value at the time of purchase and were represented by equity as follows:
| Share capital | 1 580 000 |
| Retained earnings | 480 000 |
| Total shareholders' funds | 2 060 000 |
Additional information relating to the period ended 30 June 2025:
Bucket Ltd had an after-tax profit of $665 000. Bucket Ltd proposed a dividend out of post-acquisition profits of $90 000. This dividend will not be paid until the following period.
Mop Ltd accrues the dividends of associates as revenue when they are proposed. The investment has been recorded in Mop's books in accordance with the cost method.
What consolidation journal entries are required to apply under the equity accounting method for the period ended 30 June 2025 assuming that Mop Ltd is a parent entity?
Group of answer choices
| Dr | Investment in Bucket Ltd | 824 000 |
|
| Cr | Cash |
| 824 000 |
| Dr | Dividend receivable | 36 000 |
|
| Cr | Investment in Bucket Ltd |
| 36 000 |
| Dr | Investment in Bucket Ltd | 266 000 |
|
| Cr | Share of associate's profit |
| 266 000 |
| Dr | Investment in Bucket Ltd | 266 000 |
|
| Cr | Share of associate's profit |
| 266 000 |
| Dr | Dividend revenue | 36 000 |
|
| Cr | Investment in Bucket Ltd |
| 36 000 |
| Dr | Investment in Bucket Ltd | 824 000 |
|
| Cr | Share capital |
| 632 000 |
| Cr | Retained earnings |
| 192 000 |
| Dr | Dividend receivable | 36 000 |
|
| Cr | Investment in Bucket Ltd |
| 36 000 |
| Dr | Investment in Bucket Ltd | 824 000 |
|
| Cr | Share capital |
| 632 000 |
| Cr | Retained earnings |
| 192 000 |
| Dr | Dividend revenue | 36 000 |
|
| Cr | Investment in Bucket Ltd |
| 36 000 |
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Accounting What The Numbers Mean
Authors: David Marshall, Wayne McManus, Daniel Viele
8th Edition
0073379417, 978-0073379418
