Question

On August 1st 20X1 Parker Chemicals Ltd. purchased 20% equity shares of A-Trade Ltd. out of their 5 million issued shares, for long-term investment purposes. The purchase consideration totaled Rs. 2.56m and the brokerage commission for the transaction was calculated at the rate of 3 paisa per share. Parker’s financial year ends on December 31st 20X1 and on that date the market value of investment in A-Trade Ltd. stood at Rs. 2.79m.
On December 31st 20X2 the market value of investment in A-Trade Ltd. was estimated to be Rs. 2.71m.
Required:
1.   Pass necessary journal entries to record the transactions in the books of Parker Chemicals Ltd. for the years ending 31st December 20X1 and 31st December 20X2.
2.   Provide the extracts from the statements of financial position and the statements of comprehensive income for the years ending 31st December 20X1 and 31st December 20X2.                                          

Answer 1