Note: RP AND IDR SAMEThe book I use: Intermediate Accounting, Kieso, ifrs Edition, Fourth Edition. Theory ProblemExplain the difference between the Fair Value Method and the Equity Method in recordinginvestments. If PT A buys 30% of PT B's shares and has no significant influencesignificant which method to choose? Explain!Calculation QuestionThe transactions below are some investment transactions by PT.INDO PRATAMA in 2019.Jan 20 Purchased 450,000 shares of PT.NAKA common stock (10%) Rp.3,350 per share plus acommission fee of Rp.990,000. The purpose of investment is to seek gain, speculation.April 1 Purchased 750,000 common shares of PT. KIKO (30%) Rp. 5,200 per share plus acommission fee of Rp. 1,685,000.2May 20 Sold 400,000 shares of PT. NAKA at a price of Rp. 3,500 per share, minus brokercommissions, taxes and fees of Rp. 1,425,000.Jul 01 Purchased PT.LEMBAYUNG bonds Rp.3,000,000,000.7%, interest date July 1, 3 years, pricedat Rp.2,848,120,000 with a yield of 10%. The purpose of this investment is to be helduntil maturity.31 December Data is known for 31 December 2019Net incomeCashFair value/sharePT.KIKOPT. NAKARp. 6,000,000,000Rp. 350,000,000 Rp. 500,000,000IDR 1,750,000,000Rp. 6,500,000,000IDR 2,750,000,000Requested:Record the above transactions in the general journal at PT INDO PRATAMAPT. LEMBAYUNGIDR 2,900,000,000

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Explain the difference between the Fair Value Method and the Equity Method in recording investments. If PT A buys 30% of PT B's shares and has no significant influence significant which method to choose? Explain!

Explain the difference between the Fair Value Method and the Equity Method in recording investments. If PT A buys 30% of PT B's shares and has no significant influence significant which method to choose? Explain!

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 18E: Trading Securities Pear Investments began operations in 2020 and invests in securities classified as...

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Question

Note: RP AND IDR SAME The book I use: Intermediate Accounting, Kieso, ifrs Edition, Fourth Edition.

Theory Problem
Explain the difference between the Fair Value Method and the Equity Method in recording
investments. If PT A buys 30% of PT B's shares and has no significant influence
significant which method to choose? Explain!
Calculation Question
The transactions below are some investment transactions by PT.INDO PRATAMA in 2019.
Jan 20 Purchased 450,000 shares of PT.NAKA common stock (10%) Rp.3,350 per share plus a
commission fee of Rp.990,000. The purpose of investment is to seek gain, speculation.
April 1 Purchased 750,000 common shares of PT. KIKO (30%) Rp. 5,200 per share plus a
commission fee of Rp. 1,685,000.
2
May 20 Sold 400,000 shares of PT. NAKA at a price of Rp. 3,500 per share, minus broker
commissions, taxes and fees of Rp. 1,425,000.
Jul 01 Purchased PT.LEMBAYUNG bonds Rp.3,000,000,000.7%, interest date July 1, 3 years, priced
at Rp.2,848,120,000 with a yield of 10%. The purpose of this investment is to be held
until maturity.
31 December Data is known for 31 December 2019
Net income
Cash
Fair value/share
PT.KIKO
PT. NAKA
Rp. 6,000,000,000
Rp. 350,000,000 Rp. 500,000,000
IDR 1,750,000,000
Rp. 6,500,000,000
IDR 2,750,000,000
Requested:
Record the above transactions in the general journal at PT INDO PRATAMA
PT. LEMBAYUNG
IDR 2,900,000,000

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