Mozart Ltd Acquired 25% and Significant Influence Over the Operations

question 2

Multiple Choice

Mozart Ltd acquired 25% and significant influence over the operations of Liszt Ltd on 1 January 20X0.Both companies have financial years ending 31 December.Liszt Ltd reported a profit of $80 000 and paid a cash dividend of $0.04 per share.Liszt Ltd has issued 1 million ordinary shares.Under equity accounting, by how much would the 'Investment in Liszt Ltd' account change for the year ended 31 December 20X0?

• A)increase of $40 000
• B)decrease of $40 000
• C)increase of $20 000
• D)increase of $10 000

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