Page 282 - SBR Integrated Workbook STUDENT S18-J19

Chapter 18

Example 11 – continued

 On 1 July 20X1, Holmes purchased 40% of the ordinary shares of
Hudson for $10 million and recorded the investment as a financial asset.
No other entries have been posted. Holmes can appoint two of the five
members of Hudson’s board of directors. Hudson made a profit of $3
million in the year ended 31 December 20X1.

Explain to the finance director how to correct the above issues for
inclusion in the consolidated financial statements. Provide the journal
entries required.

276