A. On 1 July 2020, Alba Bbd. acquired 30 per cent of the ordinary shares that carry voting rights at a general meeting of sharebolders of Balba Bhd. for RM300,000.00. For the year ended 30 June 2021. Balba Bhd recognised a profit of RM400,000.00. On 29 June 2021 entity Balba Bhd declared and paid a dividend of RMI50,000.00 for the year 2021. At 30 June 2021 the fair value of Alba's investment in Balba Bbd is RM425,000.00. However, there is no published price quotation for Balha Bhd. On 30 June 2021 Alba Bhd. lost significant influence over Bolba Bhd. when it reduced its sharcholding in Balba Bhd to 15 per cent by selling half of its shares in Balba Bhd. to an independent third party for RM212,500.00. Transaction costs of RM5,000.00 were incurred in selling the shares. REQUIRED: Calculate the investment for Alba Bhd. and Balba Bhd. using equity method.

A. On 1 July 2020, Alba Bbd. acquired 30 per cent of the ordinary shares that carry voting rights at a general meeting of sharebolders of Balba Bhd. for RM300,000.00. For the year ended 30 June 2021. Balba Bhd recognised a profit of RM400,000.00. On 29 June 2021 entity Balba Bhd declared and paid a dividend of RMI50,000.00 for the year 2021. At 30 June 2021 the fair value of Alba's investment in Balba Bbd is RM425,000.00. However, there is no published price quotation for Balha Bhd. On 30 June 2021 Alba Bhd. lost significant influence over Bolba Bhd. when it reduced its sharcholding in Balba Bhd to 15 per cent by selling half of its shares in Balba Bhd. to an independent third party for RM212,500.00. Transaction costs of RM5,000.00 were incurred in selling the shares. REQUIRED: Calculate the investment for Alba Bhd. and Balba Bhd. using equity method.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 24E

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