On January 1, 2012, CC Company Acquired 60,000 Shares, Representing

question 49

Essay

On January 1, 2012, CC Company acquired 60,000 shares, representing 20% of the outstanding shares of VV Limited, at $25 per share. On July 31, 2012, VV declared and paid a dividend of $3 per share. VV's net income for 2012 was $1,000,000. On December 31, 2012, the shares of VV were trading on the Toronto Stock Exchange at $31 per share.
Required:
CC is not sure how to report its investment in VV shares. Using the format provided, indicate the amounts that would appear on the balance sheet and the statement of comprehensive income for 2012 if the investment is considered to be (a)available for sale, (b)held for trading, or (c)an associate.

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Definitions:

Rule

A prescribed guideline or regulation for conduct, action, or the operation of systems.

Internal Rate of Return

A metric used in financial analysis to estimate the profitability of potential investments.

Cash Flows

The grand total of financial transactions affecting a company's inflow and outflow, significantly impacting its liquid capital.

Investment

The action or process of investing money for profit or material result.