Mop Ltd Acquired a 40 Per Cent Interest in Bucket

question 17

Multiple Choice

Mop Ltd acquired a 40 per cent interest in Bucket Ltd on 1 July 2004 for a cash consideration of $824,000. Bucket Ltd's assets and liabilities were recorded at fair value at the time of purchase and were represented by equity as follows:

Additional information relating to the period ended 30 June 2005:
Bucket Ltd had an after-tax profit of $665,000.
Bucket Ltd proposed a dividend out of pre-acquisition profits of $90,000.
Later in the period Bucket Ltd paid the $90,000 dividend and declared a further $100,000 dividend out of post-acquisition profits. This dividend will not be paid until the following period.
Mop Ltd accrues the dividends of associates as revenue when they are proposed. The investment has been recorded in Mop'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 2005?

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Definitions:

Inability To Tolerate Light

A condition, also known as photophobia, where the eyes are overly sensitive to light, causing discomfort or pain.

Epinephrine

A hormone and medication, also known as adrenaline, that increases heart rate, muscle strength, and blood pressure, often used in emergency treatment of severe allergic reactions.

Adrenal Medulla

The inner part of the adrenal gland that produces adrenaline and noradrenaline, hormones involved in the body's fight-or-flight response.

Hormone

A chemical substance secreted by an organ or gland.