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Calculate the carrying amount of the investment in bandicoot

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Reference no: EM132465104

Adjustments where investor prepares and does not prepare consolidated financial statements

Brown Ltd acquired a 30% interest in Bandicoot Ltd for $50 000 cash on 1 July 2015. The directors of Brown Ltd believe this investment represents significant influence over the investee. The equity of Bandicoot Ltd at the acquisition date was:

Share capital                                  $ 30000
Retained earnings                             120 000

All the identifiable assets and liabilities of Bandicoot Ltd were recorded at fair value. Profits and dividends for the years ended 30 June 2016 to 2018 were as follows:

Question 1. Prepare journal entries in the records of Brown Ltd for each of the years ended 30 June 2016 to 2018 in relation to its investment in the associate, Bandicoot Ltd. (Assume Brown Ltd does not prepare consolidated financial statements.)

Question 2. Prepare the consolidation worksheet entries to account for Brown Ltd's interest in the associate/joint venture, Bandicoot Ltd. (Assume Brown Ltd does prepare consolidated financial statements.)

Question 3. Calculate the carrying amount of the investment in Bandicoot Ltd at 30 June 2018.

Attachment:- bandicoot.rar

Reference no: EM132465104

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