Kate Inc. used the acquisition method when it acquired its investment in Meghan Co. Kate Inc. now sells some of its shares of Meghan such that neither control nor significant influence exists. Which of the following statements is true?
Added by Curtis M.
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When Kate Inc. acquired its investment in Meghan Co. using the acquisition method, it likely recognized Meghan Co. as a subsidiary, meaning it had control over Meghan Co. at that time. Show more…
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Use the PFRS for SMEs. On 31 December 20X1, entity A acquired 30 percent of the ordinary shares that carry voting rights of entity B for ₱100,000. Entity A incurred transaction costs of ₱1,000 in acquiring these shares. Entity A has significant influence over entity B. Entity A uses the cost model to account for its investments in associates. In January 20X2, entity B declared and paid a dividend of ₱20,000 out of profits earned in 20X1. No further dividends were paid in 20X2, 20X3, or 20X4. A published price quotation does not exist for entity B. At 31 December 20X1, 20X2, and 20X3, in accordance with Section 27 Impairment of Assets, management assessed the fair values of its investment in entity B as ₱102,000, ₱110,000, and ₱90,000 respectively. Costs to sell are estimated at ₱4,000 throughout. Entity A measures its investment in entity B on 31 December 20X1, 20X2, and 20X3 respectively at: a. ₱100,000, ₱100,000, ₱100,000. b. ₱95,000, ₱95,000, ₱86,000. c. ₱98,000, ₱106,000, ₱86,000. d. ₱98,000, ₱101,000, ₱86,000. e. ₱102,000, ₱110,000, ₱90,000.
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On 1 January 20X3, Westbridge acquired all of Brookfield's 100,000 $1 shares for $300,000. The goodwill acquired in the business combination was $40,000, of which 50% had been written off as impaired by 31 December 20X5. On 31 December 20X5, Westbridge sold all of Brookfield's shares for $450,000 when Brookfield had retained earnings of $185,000. What is the profit on disposal that should be included in the individual entity financial statements of Westbridge?
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ABC Ltd. has a 15% holding in the shares of XYZ Ltd. In addition, ABC has, through one of its subsidiaries, a currently exercisable option to buy 15% more shares in XYZ. Although the exercise price is in the money, ABC does not have the intention and the financial ability to exercise this option. How should this investment be classified? A. An investment B. A subsidiary C. A joint arrangement D. An associate
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