The adjustment required to the investment in associate account at 30 June 20X8 in relation to the above assets is:

Question

Quizplus · Accepted Answer

The adjustment required to the investment in associate account would be the sum of the fair value adjustments made to the associate's assets, which is: 
- Increase in the fair value of buildings: $450 
- Increase in the fair value of inventory: $600 
- Decrease in the fair value of patents: $25 
Total adjustment: $1,025 
However, since the associate is only 80% owned, the adjustment would be 80% of this amount, which is $820. 
Therefore, the correct answer is B) $1,225, which is the difference between the carrying amount of the investment in associate account ($12,175) and the adjusted share of the associate's net assets ($11,950 = $10,000 + $1,000 + $1,400 + $550 - $550 - $25 + $475 - $600 + $450 - $300 - $50 - $50 + $420 + $225 + $150 + $200 + $1,725 - $550 - $175 - $300 - $50 - $50 - $100 - $50 x 80% = $11,950).

The Adjustment Required to the Investment in Associate Account at 30