On 1s January 2020, Khairul Bhd acquired 20,000 shares in Amin Bhd for RM 80,000. This gave Khairul Ltd significant influence over Amin Ltd. At the date of acquisition, the Statement of Financial Position of Amin Ltd recognised paid- up capital (50,000 shares) of RM100,000 and retained earnings of RM 50,000. During the financial year 2020: • The profit before tax for Amin Ltd was RM 30,000. • Amin Ltd sold RM10,000 inventory to Khairul Ltd for RM 15,000. At year end, Khairul Ltd had 50% of the inventory on hand. • Amin Ltd paid dividend of RM 20,000. Tax rate applicable is 30%. Required: Prepare all relevant journal entries. Compute the investment in associate at the end of the financial year, 2020.

On 1s January 2020, Khairul Bhd acquired 20,000 shares in Amin Bhd for RM 80,000. This gave Khairul Ltd significant influence over Amin Ltd. At the date of acquisition, the Statement of Financial Position of Amin Ltd recognised paid- up capital (50,000 shares) of RM100,000 and retained earnings of RM 50,000. During the financial year 2020: • The profit before tax for Amin Ltd was RM 30,000. • Amin Ltd sold RM10,000 inventory to Khairul Ltd for RM 15,000. At year end, Khairul Ltd had 50% of the inventory on hand. • Amin Ltd paid dividend of RM 20,000. Tax rate applicable is 30%. Required: Prepare all relevant journal entries. Compute the investment in associate at the end of the financial year, 2020.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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