On 1 January 2019, Sky-High Ltd Acquired 100 000 Shares

question 24

Multiple Choice

On 1 January 2019, Sky-High Ltd acquired 100 000 shares (30 per cent of the voting interest) in Down Ltd for $600 000 cash. On 30 June 2019, Down Ltd announced its earnings per share for the first six months of 2019 at $1.50 per share. On 20 November, Down Ltd paid dividends to shareholders at $0.90 per share. On 31 December 2019, Down Ltd announced its earnings per share for 2019 at $2.80 per share (i.e. $1.30 additional since 30 June) . If Sky-High Ltd used the cost basis, which of the following accounting records would it make on 30 June 2019 in response to Down Ltd's earnings announcement?

• A) It would increase dividend revenue by $150 000.
• B) It would increase investment in Down Ltd by $150 000.
• C) It would decrease investment in Down Ltd by $150 000.
• D) No record would have been made.

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Definitions:

Leadership Behaviour

Actions taken by a leader to influence or guide a group towards achieving its goals.

Initiating Structure

A leadership behavior that organizes and defines what group members should be doing to maximize output.

Leader Satisfaction

The degree to which a leader feels contentment or fulfillment from their role, responsibilities, and the performance of their team.

Job Performance

Job performance entails the effectiveness and efficiency with which an employee fulfills their job duties and responsibilities.