On July 1, X6, Influence Ltd. paid $100,000 to acquire 1,000 common voting shares of Associés Ltd., representing a 30% interest. Associé Ltée declares dividends of $1 per share on December 1, X6. The JV of Associate's shares as of December 31, X6, is $115. The profit generated by Associate during the last 6 months of X6 amounts to $240,000. Determine the gain or loss on the disposition of the shares by assuming that Influence Ltée sells 500 shares of Associé Ltée on December 31, X6 for an amount of $200 per share. Question 4 options: $14,000 $50,000 none of the above $14,500 $42,500
On July 1, X6, Influence Ltd. paid $100,000 to acquire 1,000 common voting shares of Associés Ltd., representing a 30% interest. Associé Ltée declares dividends of $1 per share on December 1, X6. The JV of Associate's shares as of December 31, X6, is $115. The profit generated by Associate during the last 6 months of X6 amounts to $240,000. Determine the gain or loss on the disposition of the shares by assuming that Influence Ltée sells 500 shares of Associé Ltée on December 31, X6 for an amount of $200 per share. Question 4 options: $14,000 $50,000 none of the above $14,500 $42,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
On July 1, X6, Influence Ltd. paid $100,000 to acquire 1,000 common voting shares of Associés Ltd., representing a 30% interest. Associé Ltée declares dividends of $1 per share on December 1, X6. The JV of Associate's shares as of December 31, X6, is $115. The profit generated by Associate during the last 6 months of X6 amounts to $240,000. Determine the gain or loss on the disposition of the shares by assuming that Influence Ltée sells 500 shares of Associé Ltée on December 31, X6 for an amount of $200 per share.
Question 4 options:
$14,000
$50,000
none of the above
$14,500
$42,500
Expert Solution
Step 1: Carrying value :
Solution:
| Cost of acquisition | $ 100,000 |
| Add: Share in net income earned during the holding period (240,000*30%) | $ 72,000 |
| Less: Dividend received during this period | $ (1,000) |
| Carrying value of investment as on 31 dec. X6 | $ 171,000 |
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