ex 28.2 Associate

ex 28.2 Associate - TUTORIAL 11 SOLUTIONS Exercise 28.2...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: TUTORIAL 11 SOLUTIONS Exercise 28.2 Accounting for an associate by an investor JASMINE LTD HAYLEY LTD 40% Jasmine Ltd Hayley Ltd At 1 July 2009: N e t f a i r v a l u e o f i d e n t i f i a b l e a s s e t s a n d c o n t i n g e n t l i a b i l i t i e s o f H a y l e y L t d = $ 4 N e t f a i r v a l u e a c q u i r e d = 4 % x $ 4 = $ 1 6 C o s t o f i n v e s t m e n t = $ 1 7 G o o d w i l l = $ 1 Recorded profit Hayley Ltd $39 000 I n v e s t o r s S h a r e 4 % 1 5 6 I n c r e m e n t i n A s s e t R e v a l u a t i o n R e s e r v e $ 4 ( 4 % x $ 1 ) Note : 1. There is no need to adjust for differences in depreciation method. If both companies have chosen a method that best reflects the flow of benefits as the assets are consumed, then there is no policy difference. 2. As the general reserve is created as an appropriation from Retained Earnings, then there is no need to adjust for movements in general reserve. The journal entries in the books of Jasmine Ltd for the year ended 30 June 2010 are:...
View Full Document

Page1 / 4

ex 28.2 Associate - TUTORIAL 11 SOLUTIONS Exercise 28.2...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online