ethod and assume that Walter ordinary shares should be classified as a trading security. (Use “FVTPL Financial Assets—Equity” account) (b) Prepare the journal entries for Control Alt Design for 2020, assumin
Control Alt Design Ltd. acquired 30% of the outstanding ordinary shares of Walter Company on January 1, 2020, by paying £800,000 for the 45,000 shares. Walter declared and paid £0.30 per share cash dividends on March 15, June 15, September 15, and December 15, 2020. Control Alt Design Ltd. received 10% share dividends on June 1. Walter reported net income of £320,000 for the year. At December 31, 2020, the market price of Walter ordinary shares was £24 per share.
Instructions
(a) Prepare the
(b) Prepare the journal entries for Control Alt Design for 2020, assuming Control Alt Design can exercise significant influence over Walter. Use the equity method. (Use “Investment in Associates” account)
(c) Indicate the statement of financial position and income statement account balances at December 31, 2020, under each method of accounting.
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