Question

Big owns 60% of Little and at December 31, 2012, its Investment in Little account stands...

Big owns 60% of Little and at December 31, 2012, its Investment in Little account stands at $6,000,000. On that date Big sells half its ownership for $4,000,000 cash. a. Prepare the journal entry to be recorded by Big on December 31, 2012. b. Same facts as above, except the sales price is $2,500,000 cash. Prepare the journal entry to be recorded by Big on December 31, 2012.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

IFRS requires that the investment stake must be revalued to Fair Value on conversion of the subsidiary to an associate due to a stake sale.

a)

Particulars Dr. Cr.
Cash 4000000
   Gain on Revaluation 2000000
   Investment in Little 2000000

Note:- The above approach does not apply in case of part-equity or initial value method.

b)

Particulars Dr. Cr.
Cash 2500000
   Gain on Revaluation 1000000
   Investment in Little 1500000

Note:- Alternate ways are there to post the entries but the net effect remains the same in all cases.

*** Please comment in case of any doubt or query and i will get back to you. ***

Please hit like if this helps!

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
thompson owns 100% of Rollins and at 12/31/2012. its investment in Rollins account stands at 10000000....
thompson owns 100% of Rollins and at 12/31/2012. its investment in Rollins account stands at 10000000. on that date thompson sells 20% of its ownership for2500000 cash prepare the j/e to be recorded by thompson on 12/31/2012? b. Same facts as above, except the sales price is $1,000,000 cash. Prepare the journal entry to be recorded by Thompson on December 31,2012. Answer b please.
thompson owns 100% of Rollins and at 12/31/2012. its investment in Rollins account stands at 10000000....
thompson owns 100% of Rollins and at 12/31/2012. its investment in Rollins account stands at 10000000. on that date thompson sells 20% of its ownership for2500000 cash prepare the j/e to be recorded by thompson on 12/31/2012?
1. Wang owns 30% of Chen and at December 31, 2015 the balance in Wang's investment...
1. Wang owns 30% of Chen and at December 31, 2015 the balance in Wang's investment account equals $400,000. On January 1, 2016 Wang purchases an additional 40% ownership in Chen for $600,000 bringing Wang's ownership up to 70%. Wang will Dr. Investment in Chen for $600,000 and credit cash for $600,000. What additional entry will Wang be required to make to reflect the increase in ownership.
Roberts owns 50% of Smith at has a balance in the investment account of $200,000 at...
Roberts owns 50% of Smith at has a balance in the investment account of $200,000 at December 31, 2015. On January 1, 2016, Roberts purchases an additional 10% ownership in Smith for $70,000. Roberts will Dr. Investment in Smith for $70,000 and credit Cash for $70,000. What additional entry will Roberts be required to make to reflect the increase in ownership?
Oriole Company issued $640,000, 10%, 10-year bonds on December 31, 2019, for $570,000. Interest is payable...
Oriole Company issued $640,000, 10%, 10-year bonds on December 31, 2019, for $570,000. Interest is payable annually on December 31. Oriole Company uses the straight-line method to amortize bond premium or discount. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31, 2019 Prepare the journal entry to record the payment of interest and the discount...
The information that follows relates to equipment owned by Coronado Limited at December 31, 2020: Cost...
The information that follows relates to equipment owned by Coronado Limited at December 31, 2020: Cost $10,800,000 Accumulated depreciation to date 1,200,000 Expected future net cash flows (undiscounted) 8,400,000 Expected future net cash flows (discounted, value in use) 7,620,000 Fair value 7,440,000 Costs to sell (costs of disposal) 60,000 Assume that Coronado will continue to use this asset in the future. As at December 31, 2020, the equipment has a remaining useful life of four years. Coronado uses the straight-line...
Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...
Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2014, Hamilton sold $1,100,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 8...
Presented below is information related to equipment owned by Cullumber Company at December 31, 2017. Cost...
Presented below is information related to equipment owned by Cullumber Company at December 31, 2017. Cost $10,440,000 Accumulated depreciation to date 1,160,000 Expected future net cash flows 8,120,000 Fair value 5,568,000 Cullumber intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $23,200. As of December 31, 2017, the equipment has a remaining useful life of 5 years. Prepare the journal entry (if any) to record the impairment of the...
Presented below is information related to equipment owned by Ivanhoe Company at December 31, 2017. Cost  ...
Presented below is information related to equipment owned by Ivanhoe Company at December 31, 2017. Cost       $10,080,000 Accumulated depreciation to date       1,120,000 Expected future net cash flows       7,840,000 Fair value       5,376,000 Ivanhoe intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $22,400. As of December 31, 2017, the equipment has a remaining useful life of 5 years.    Prepare the journal entry (if any) to...
Presented below is information related to equipment owned by Whispering Company at December 31, 2017. Cost...
Presented below is information related to equipment owned by Whispering Company at December 31, 2017. Cost $10,350,000 Accumulated depreciation to date 1,150,000 Expected future net cash flows 8,050,000 Fair value 5,520,000 Assume that Whispering will continue to use this asset in the future. As of December 31, 2017, the equipment has a remaining useful life of 4 years. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2017. (If no entry is required,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT