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Unformatted text preview: Week 6 27 Jan (DM) Lecture Topic 11 Accounting for Associates: The Equity Method Identify associates and explain the difference between an associate and other investments Prepare journal entries to account for interests in associates Post equity accounting adjustments to determine relevant balances in the financial statements of the investor Seminar Questions: Picker et al, Chapter 28 Exercise 28.2 Exercise 28.8 Exercise 28.2 Accounting for an associate by an investor JASMINE LTD HAYLEY LTD 40% Jasmine Ltd Hayley Ltd At 1 July 2009: Net fair value of identifiable assets and contingent liabilities of Hayley Ltd = $400 000 Net fair value acquired = 40% x $400 000 = $160 000 Cost of investment = $170 000 Goodwill = $10 000 Recorded profit Hayley Ltd $39 000 Investors Share 40% 15 600 Increment in Asset Revaluation Reserve $40 000 (40% x $100 000) 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...
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This note was uploaded on 02/23/2012 for the course ACCT 2311 taught by Professor Shan during the Spring '12 term at Allen University.
- Spring '12