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

question 1

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 equity basis, what revenue would it record for the year ended 31 December 2019 in respect of its investment in Down Ltd?

• A) $90 000
• B) $150 000
• C) $190 000
• D) $280 000

---

Definitions:

Initiative Versus Guilt

A stage in Erik Erikson's theory of psychosocial development where young children develop a sense of initiative and determination or experience guilt for failing to meet expected standards.

Preoperational Stage

The second stage in Piaget's theory of cognitive development, roughly ages 2 to 7, characterized by symbolic thinking and the use of words and images to represent objects.

Formal Operational

The stage in Piaget's theory of cognitive development where individuals (around 12 years and older) develop the ability to think abstractly, logically, and systematically.

Attachment

The emotional bond that forms between an individual, especially an infant, and a caregiver, influencing the individual's relationships throughout life.