Question

Part a MNO Ltd prepares its financial statements to 31 December each year, the following information...

Part a
MNO Ltd prepares its financial statements to 31 December each year, the following information relevant to the financial statement.

On 1 January 2019, MNO Ltd purchased 400,000 equity shares in Company A. Company A’s shares are listed on Hong Kong Stock Exchange. This share purchase did not give MNO Ltd control or significant influence over Company A but MNO Ltd intends to retain the shares in company A as a long term strategic investment rather than for trading purposes.

MNO Ltd paid $4.8 per shares for these shares in Company A. This amount represents their fair value at the date of purchase. Additionally, brokers charge a fee of 2% of the amount paid to buy or sell a share on the stock exchange on which company A’s are quoted. The brokerage fee was capitalized as investment cost in Company A’s shares

On 30 June 2019, company A paid a dividend of $0.25 per share. For the last few years, Company A has made just one dividend payment each year in the month of June.

On 31 December 2019, information received from Hong Kong Stock Exchange regarding Company A’s share price was $5.4 per share

Required
Prepare journal entries of above events in the financial statement of MNO Ltd for the year ended 31 December 2019.

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Answer #1

The Journal entries are tabulated hereunder

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