An investor company holds 45% of shares, valued at $60 000, in its associate company. It...
An investor company holds 45% of shares, valued at $60 000, in its associate company. It has also given a loan of $50 000 to its associate company on 1st January 2011. The associate company has incurred losses of $80 000 for the financial year end 31st December 2011. What is the value of the investment in the associate company reported in the financial statements of the investor company for the year end 2011? A) ($44 000) B) ($36 000) C) $24 000 D) $74 000
Homework Answers
| Cost of the equity investment in associate | 60000 |
| Less: Share of loss for the year = 80000*45% = | 36000 |
| Value of the equity investment at 31 December 2011 | 24000 |
| Add: Loan amount | 50000 |
| Value of total investment in associate to be shown in financial statements | 74000 |
| Answer: Option [D] $74,000 |
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