Question

3. Pass Journal Entry under the following conditions where: “Parent No Longer Holds an Equity Interest” And “Parent Maintains an Equity Interest”:

a. On December 31, 20X9, P Ltd Investments in Q Ltd account has a balance of $75,000. P Ltd’s 80% interest in Q Ltd has a fair value of $110,000. On January 1, 20X0, P Ltd sells all of its Q Ltd shares for $90,000. How should P Ltd account for this transaction?

b) And if P Ltd sells half (remaining 40%) of Q Ltd’s shares for $50,000. How should P Ltd account for this transaction?

Answer 1

	Yes Parent doesn't hold equity interest... but maintain a equity interest.
Date	Account Title	Debit -$	Credit-$
A	Cash	$90,000
	Loss on sale of investment	$20,000
	Investment in Q		$110,000
	(Being Investment Sold on Fair value)
B
	If 40% Share are sold
Date	Account Title	Debit -$	Credit-$
	Cash	50000
	Investment		45000
	Profit on investment		5000
	(Being 50% share sold)