Bee Ltd acquired a 40 per cent interest in Bop Ltd on 1 July 2004 for a cash consideration of $772,000.Bop Ltd's equity at the time of purchase was as follows: Additional information:
On 1 July 2004 Bop's plant and equipment had a carrying value of $600,000 but a fair value of $650,000.The carrying value of land was $560,000 while the fair value was $600,000.The remaining expected useful life of the plant and equipment at 1 July 2004 was 8 years.Bop did not revalue either asset in its books.
For the period ending 30 June 2004 Bop Ltd recorded an after-tax profit of $470,000 out of which dividends of $60,000 were proposed in the 2004/2005 period and paid in the 2005/2006 period.
For the year ended 30 June 2006 Bop Ltd had an after-tax loss of $60,000.Bop Ltd proposed a dividend of $120,000,which has not been paid this period.
Also during the year ended 30 June 2006,Bop Ltd revalued the land to $610,000.
Bee Ltd accrues dividends of associates as revenue when they are proposed.The investment has been recorded in Bee Ltd's books in accordance with the cost method.What consolidation journal entries are required to apply the equity accounting method for the period ended 30 June 2006?
E) None of the given answers.

Question

Bee Ltd acquired a 40 per cent interest in Bop Ltd on 1 July 2004 for a cash consideration of $772,000.Bop Ltd's equity at the time of purchase was as follows:  Additional information:
On 1 July 2004 Bop's plant and equipment had a carrying value of $600,000 but a fair value of $650,000.The carrying value of land was $560,000 while the fair value was $600,000.The remaining expected useful life of the plant and equipment at 1 July 2004 was 8 years.Bop did not revalue either asset in its books.
For the period ending 30 June 2004 Bop Ltd recorded an after-tax profit of $470,000 out of which dividends of $60,000 were proposed in the 2004/2005 period and paid in the 2005/2006 period.
For the year ended 30 June 2006 Bop Ltd had an after-tax loss of $60,000.Bop Ltd proposed a dividend of $120,000,which has not been paid this period.
Also during the year ended 30 June 2006,Bop Ltd revalued the land to $610,000.
Bee Ltd accrues dividends of associates as revenue when they are proposed.The investment has been recorded in Bee Ltd's books in accordance with the cost method.What consolidation journal entries are required to apply the equity accounting method for the period ended 30 June 2006?
E) None of the given answers.

Quizplus · Accepted Answer

The Answer of Bee Ltd acquired a 40 per cent interest in Bop Ltd on 1 July 2004 for a cash consideration of $772,000.Bop Ltd's equity at the time of purchase was as follows:  Additional information:
On 1 July 2004 Bop's plant and equipment had a carrying value of $600,000 but a fair value of $650,000.The carrying value of land was $560,000 while the fair value was $600,000.The remaining expected useful life of the plant and equipment at 1 July 2004 was 8 years.Bop did not revalue either asset in its books.
For the period ending 30 June 2004 Bop Ltd recorded an after-tax profit of $470,000 out of which dividends of $60,000 were proposed in the 2004/2005 period and paid in the 2005/2006 period.
For the year ended 30 June 2006 Bop Ltd had an after-tax loss of $60,000.Bop Ltd proposed a dividend of $120,000,which has not been paid this period.
Also during the year ended 30 June 2006,Bop Ltd revalued the land to $610,000.
Bee Ltd accrues dividends of associates as revenue when they are proposed.The investment has been recorded in Bee Ltd's books in accordance with the cost method.What consolidation journal entries are required to apply the equity accounting method for the period ended 30 June 2006?
E) None of the given answers.

Bee Ltd Acquired a 40 Per Cent Interest in Bop