Company J Has a Share Investment (Owns 60% of the Shares

question 5

Multiple Choice

Company J has a share investment (owns 60% of the shares, purchased in 20X1) and controls Company T, with a carrying amount of $200 000 at year end 20X4.Company T reports no increase in owner's equity between 20X0 and 20X5 but for the year ended 20X5 pays a cash dividend of $60 000, of which Company J receives $36 000.Which journal entry will Company J process in respect of this investment, assuming that AASB 127.38A is in effect during the period?

• A)Debit to cash, credit to investment, $36 000
• B)Debit to investment in associate, credit to share of associate's profit or loss, $36 000
• C)Debit to cash, credit to dividend revenue, $36 000
• D)Debit to investment, credit to dividend revenue, $36 000

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Definitions:

Current Flow

The directed movement of electric charge through a conductor, often described in terms of direction from positive to negative points.

Parallel

An electrical circuit configuration where components are connected across the same two points, providing multiple paths for the current.

Series

A circuit configuration where components are connected in a linear sequence so that the same current flows through each component.

Two-Branch

Refers to a circuit configuration that splits into two distinct paths or branches, often used in parallel circuit analysis.