The Following Information Relates to Questions Nero Ltd Purchased a 30

question 4

Multiple Choice

The following information relates to questions Nero Ltd purchased a 30% per cent shareholding in Bianco Ltd on 1 January 20X8 for $180,000. Bianco Ltd’s assets recorded at fair values and its owners’ equity, totalling $520,000, was represented as follows: $\begin{array} { l r } \text { Share capital } & \$ 260,000 \\\text { Reserves } & \$ 120,000 \\\text { Retained profits } & \$ 100,000 \\\text { Asset revaluation reserve } & \$ 40,000\end{array}$
During July 20X8, Bianco Ltd paid an interim dividend of $18,000. At 31 December 20X8, Bianco Ltd reported: $\begin{array}{ll}\text { Profit for 20X8 } & \$ 48,000 \\\text { Final dividend payable } & \$ 14,000 \\\text { A transfer to the general reserve } & \$ 10,000 \\\text { Increase of the asset revaluation reserve to } & \$ 70,000\end{array}$
-Assuming that Nero Ltd applies the equity method in its own books the entry to record the dividend receivable from Bianco Ltd at 31 December 20X9 would include:

• A) a credit to the dividend revenue account.
• B) a credit to the investment in associate account.
• C) a debit to the dividend revenue account.
• D) a debit to the investment in associate account.

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Definitions:

Job Order Costing

An accounting method used to track costs and evaluate the profitability of individual jobs, suitable for companies that produce custom products or jobs.

Large Aircraft Manufacturers

Companies that specialize in the development, assembly, and selling of aircrafts that have a high passenger or cargo capacity.

Process Costing

An accounting methodology applied where production is continuous, assigning costs to units of product on the basis of process they go through.

Customized Products

Items or services tailored to meet the specific needs or preferences of individual customers.