Gunawan Limited acquired a 20% share in Juliano Limited for $18 000.Gunawan Limited has no other investments.At the date on which it became an associate,Juliano Limited had the following equity:
-Share capital $50 000
-Retained earnings $40 000
At the end of the financial year following the investment,Juliano Limited generated a profit of $6 000.After applying the equity method of accounting,Gunawan Limited will have the following carrying amount for the investment:

Question

Quizplus · Accepted Answer

Gunawan Limited's share of Juliano Limited's profit is 20% of $6,000, which is $1,200. Adding this to the initial investment of $18,000 gives a carrying amount of $19,200.

Gunawan Limited Acquired a 20% Share in Juliano Limited for $18