Mozart Ltd Acquired 25% and Significant Influence Over the Operations

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