Question
Part B Bluebell Ltd, acquired a 30 per cent interest in Clover Ltd for $175,000 in cash on 1 July 2019. The directors of Bluebell
Part B
Bluebell Ltd, acquired a 30 per cent interest in Clover Ltd for $175,000 in cash on 1 July 2019. The directors of Bluebell Limited believe this investment represents significant influence over the investee. The equity of Clover Limited at the acquisition date was as follows: Share capital - $145,000; Retained earnings - $280,000.
In addition,
- For the year ended 30 June 2020, Clover Ltd recorded an after-tax profit of $145,000.
- For the year ended 30 June 2021, Clover Ltd recorded an after-tax profit of $120,000 and paid a dividend of $15,000.
- Increase in asset revaluation reserves (revaluation of building of Daffodil Limited) - $250,000
Required:
(a) Record the relevant equity accounting adjustments in the books of Bluebell Ltd for the year ending 30 June 2021 only. Please show all workings. (8 marks)
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Financial Development Institutions Growth And Poverty Reduction
Authors: Basudeb Guha Khasnobis, George Mavrotas
2008 Edition
0230201776, 978-0230201774
