Homework Answers
| As per the given information Bramble Corp, was a 30% owner of Sunland Company | |||
| holding 216000 shares as on 31st December 2019 | |||
| So total shares of Sunland company are 216000/30*100= 720000 shares | |||
| b) Computation of Carrying amount of investment as on December 31, 2020 | |||
| Investment value as on 31.12.2019: | |||
| $ | |||
| Cost | 3140000 | ||
| Share of Income 12/31/18 | 390000 | ||
| Share of Income 12/31/19 | 530000 | ||
| 4060000 | |||
| Dividends Received on 12/6/18 | 140000 | ||
| Dividends Received on 12/5/18 | 230000 | ||
| Investment value as on 31.12.2019 for 216000 shares | 3690000 | ||
| So, the Investment value for 108000 shares sold | 1845000 | ||
| The Investment value as on 01.01.2020 for 108000 shares | 1845000 | ||
| Add: Profit for the year 2020- 280000*15/100 | 42000 | ||
| 1887000 | |||
| Less: Dividends received | 48000 | ||
| Carrying Amount as on December 31, 2020($) | 1839000 | ||
| ©. Adjusting Entry on December 31, 2020 by applying fair value method: | |||
| Date: | Accounts Titles and Explanation | Debit | Credit |
| Dec 31, 2020 | Investment in Sunland securities | 71000 | |
| Capital Reserve | 71000 | ||
| Here, the fair market value of the investment is $1910000 and the book value of the Investment is $ 1839000. So, the | |||
| difference amount of $ 71000 is credited to Capital reserve | |||
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Bramble Corp. was a 30% owner of Sunland Company, holding 216,000 shares of Sunland's common stock...
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