微觀經(jīng)濟(jì)學(xué)investments-wenkub
2022-09-11 10:53:12 本頁面
【正文】 ? Under the cost method – The investment is recorded at cost – Revenue is recognised only when cash dividends are received Example – On 1 July 2020 Prapee Ltd buys 1000 ordinary shares (10% ownership) of Just Ltd for $40 per share plus brokerage fees of $500 PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 9 Holdings of less than 20% continued 1. Recording acquisition – Cost principle is applied 2. Recording dividends – $2 per share dividend received on 31 Dec PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 10 Dec 31 Cash (1000 x $2) 2 000 Dividend Revenue 2 000 (To record receipt of a cash dividend) Jul 1 Investments in Equity Securities 40 500 Cash 40 500 (To record purchase of Just Ltd ordinary shares) Holdings of less than 20% continued 3. Recording sale – On 10 Feb 2020 Prapee Ltd receives proceeds of $39 500 on sale of its Just Ltd shares – On the ine statement ? Loss is reported under ‘Other expenses’ ? Gain is reported under ‘Other ine’ PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 11 Feb 10 Cash 39 500 Loss on sale of Equity Investments 1 000 Investments in equity securities 40 500 (To record sale of Just ordinary shares) Holdings between 20% and 50% ? Equity method is used ? Under the equity method – Investment in ordinary shares is initially recorded at cost – Investor’s share of postacquisition profit recorded when earned Example – On 1 Jan 2020 Neane Ltd buys 30% of ordinary shares of Porter Ltd for $120 000 PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 12 Holdings between 20% and 50% continued 1. Recording acquisition – Cost principle is applied 2. Recording ine – Porter profit for 2020 is $100 000 PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 13 Dec 31 Investments in equity securities 30 000 Share of Porter’s profit (associate) 30 000 (To record 30% equity in Porter’s 2020 profit) Jul 1 Investments in Equity Securities 120 000 Cash 120 000 (To record purchase of Porter Ltd ordinary shares) Holdings between 20% and 50% continued 3. Recording dividends – Porter declares and pays a cash dividend of $40 000 for 2020 – Dividend reduces investment account PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 14 Dec 31 Cash
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