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

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 a total increase in owner's equity for the year ended 20X5 of $80 000.Which journal entry will Company F process in respect of this investment?

A) Debit to investment in associate, credit to share of associate's profit or loss, $16 000
B) Debit to investment in associate, credit to share of associate's profit or loss, $80 000
C) Debit to share of associate's profit or loss, credit to investment in associate, $16 000
D) No journal entry