Company F Has an Equity Accounted Investment (Owns 20% of the Shares)

question 22

Multiple Choice

Company F has an equity accounted investment (owns 20% of the shares) in Company K, purchased in 20X1, with a carrying amount of $200 000 at year end 20X4.Company K reports no increase in owner's equity for the year ended 20X5 but pays a cash dividend of $60 000, of which Company F receives $12 000.Which journal entry will Company F process in respect of this investment as reported in its consolidated financial statements?

• A)Debit to cash, credit to investment in associate, $12 000
• B)Debit to investment in associate, credit to share of associate's profit or loss, $12 000
• C)Debit to cash, credit to share of associate's profit or loss, $12 000
• D)Debit to cash, credit to dividend revenue, $12 000

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Definitions:

Equilibrium

A state in a chemical reaction where the rates of the forward reaction and reverse reaction are equal, leading to no net change in the concentration of reactants and products.

Concentration

A measure of the amount of a substance in a given volume of solution, often expressed in molarity (moles per liter).

Blood Plasma

The liquid component of blood that holds the blood cells in suspension; it is the blood's supernatant fluid, consisting mainly of water and dissolved proteins, glucose, clotting factors, mineral ions, hormones, and carbon dioxide.

Protein

Complex organic molecules made up of amino acids, essential for the structure, function, and regulation of the body's cells, tissues, and organs.