Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help Question 2 (40 marks) HKCC Investment Limited engaged in investment activities with the following companies in 2022. Its financial year-end is December 31.

please help
image text in transcribed
image text in transcribed
Question 2 (40 marks) HKCC Investment Limited engaged in investment activities with the following companies in 2022. Its financial year-end is December 31. ABC Limited Jan 1 HKCC acquired 80,000 shares of ABC Limited for $800,000 cash (it represents 25% of the outstanding ordinary shares). Jun 30 ABC declared and paid cash dividends of $0.5 each share. Dec 31 ABC Limited paid cash dividends of $20,000 and reported net income of $500,000. DEF Limited Apr 1 HKCC acquired bonds from DEF Limited at $900,000 and intends and can hold it until its maturity (the mature date of the bonds is 1 Apr 2025). The bond has a face value of $1,000,000 and stated interest rate at 6%. The market rate of similar bonds is 9% at the date of purchase. Empower adopts the effective interest method to account for the amortization of bonds discounts or premiums. Oct 1 DEF Limited declared the semi-annual interest. Its first interest payment was due on 1 October 2022 GHI Limited May 1 HKCC purchased 6,000 GHI Limited shares at $10 each with commission fee $1,500. Investment for GHI Limited is treated as trading securities. Aug 31 It sold out half of GHI's shares at $18 less commission and brokerage fee of 2,000 on 31 August Dec 31 GHI Limited declared and paid cash dividends S2 for each share. JKL Limited Jul 1 HKCC acquired 5,000 JKL Limited shares at $50,000. Investment for JKL Limited is classified as non-trading. Dec 31 JKL Limited declared and paid cash dividends $1.8 for each share. Other information: The market price or fair value of the investments at the financial year-end are shown as below: ABC Limited: $18 per share DEF Limited: $900,000 (bond) GHI Limited: $13 per share JKL Limited: 11 per share Required: Prepare all relevant journal entries for the above investments happened in 2022. (Answers should be rounded to the nearest dollar) for each of the following companies: a) ABC Limited (8 marks) b) DEF Limited (13 marks) c) GHI Limited (12 marks) d) JKL Limited (7 marks) End of Assignment 1

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Governmental Accounting Auditing And Financial Reporting

Authors: Stephen J. Gauthier

1st Edition

0891252754, 978-0891252757

More Books

Students also viewed these Accounting questions