Question
QUESTION 3 Parent Ltd acquired 36% of the equity in Associate Ltd on 1 April 2009 for $540 000. At the date of acquisition Associate
QUESTION 3
Parent Ltd acquired 36% of the equity in Associate Ltd on 1 April2009for $540 000.
At the date of acquisition Associate Ltd had equity comprised of share capital of $745 000 and retained earnings of $278 000.
Parent Ltd has requested your help in using the equity method for this investment as required byNZ IAS 28 Investments in Associates. Parent Ltd provided you with the following information:
During March 2019 Associate Ltd made sales to Parent Ltd which resulted in an unrealised profit of $1 300.
During March 2020 Associate Ltd made sales to Parent Ltd which resulted in an unrealised profit of $700.
During March 2020 Parent Ltd made sales to Associate Ltd which resulted in an unrealised profit of $1 500.
The tax rate is 28%.
The current equity of Associate Ltd at 31 March2020comprised:
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Financial Accounting
Authors: Robert Libby, Patricia A Libby
7th Edition
0078111021, 9780078111020
