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Prepare journal entries in the records of Brown Ltd

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Question - Associates and joint ventures - Brown Ltd acquired a 23% interest in Black Lid for $125000 cash on 1 July 2019. The directors of Brown Ltd believe this investment represents significant influence over the investee. All the identifiable assets and liabilities of Black Lid were recorded at fair value. Profits and dividends for the years ended 30 June 2020 were as follows. Profit after tax: $65,000 Dividend Paid: $12,000.

Required -

a) Prepare journal entries in the records of Brown Ltd for each of the years ended 30 June 2020 in relation to its investment in the associate, Black Ltd.

b) Calculate the carrying amount of the investment in Black Ltd on 30 June 2020.

Reference no: EM133127665

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