Can experts help me do this question, thanks. Narcissus Ltd, acquired a 30 per cent interest in Daffodil Ltd for $175,000 in cash on 1 July 2019. The directors of Narcissus Limited believe this investment represents significant influence over the investee. The equity of Daffodil Limited at the acquisition date was as follows: Share capital - $145,000; Retained earnings - $280,000. In addition, • For the year ended 30 June 2020, Daffodil Ltd recorded an after-tax loss of $117,000. • For the year ended 30 June 2021, Daffodil Ltd recorded an after-tax profit of $120,000 and paid a dividend of $15,000. • Increase in asset revaluation reserves (revaluation of building of Daffodil Limited) - $100,000 Required: (a) Record the relevant equity accounting adjustments in the books of Narcissus Ltd for the year ending 30 June 2021 only. (b)Discuss the effect of equity accounting relative to cost accounting on Return on Asset for Narcissus Limited for the financial year ended June 2021.
Can experts help me do this question, thanks.
Narcissus Ltd, acquired a 30 per cent interest in Daffodil Ltd for $175,000 in cash on 1 July
2019. The directors of Narcissus Limited believe this investment represents significant
influence over the investee. The equity of Daffodil Limited at the acquisition date was as
follows: Share capital - $145,000;
In addition,
• For the year ended 30 June 2020, Daffodil Ltd recorded an after-tax loss of
$117,000.
• For the year ended 30 June 2021, Daffodil Ltd recorded an after-tax profit of
$120,000 and paid a dividend of $15,000.
• Increase in asset revaluation reserves (revaluation of building of Daffodil Limited) -
$100,000
Required:
(a) Record the relevant equity accounting adjustments in the books of Narcissus Ltd for the
year ending 30 June 2021 only.
(b)Discuss the effect of equity accounting relative to cost accounting on Return on Asset for
Narcissus Limited for the financial year ended June 2021.
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