What Is the Correct Entry to Recognise the Equity of Dragon

question 25

Multiple Choice

What is the correct entry to recognise the equity of Dragon Ltd in Lagoon Industries when Lagoon records a profit of $85 000 and Dragon holds 35% of Lagoon's ordinary shares?

• A) Debit Investment in Associates and Joint Ventures $29,750 Credit Share of Profit of Associates and Joint Ventures $29,750
• B) Debit Investment in Associate and Joint Ventures $85 000 Credit Retained Earnings $85 000.
• C) Debit Investment in Associates and Joint Ventures $29 500 Credit Retained Earnings $29 500.
• D) None of the above.

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Definitions:

Flood

An overflow of a large amount of water beyond its normal limits, especially over what is normally dry land.

Insurance

A financial product designed to protect against the risk of financial losses, both big and small, that result from damage to the insured or property, or liability for damage or injury caused to a third party.

Wealth

The abundance of valuable resources, assets, or material possessions an individual or entity controls.

Utility Function

Describes the relationship between the consumption of goods and the resulting level of satisfaction or utility for an individual.