Chapter 9
Investments
443
AP-7A (
1
3
)
To expand further into the market, on January 2, 2016, Oliver Company purchased 150,000
common shares of Provide Company, a public company with 1,000,000 outstanding common
shares traded on the Toronto Stock Exchange.
Required
a) What level of influence does Oliver Company have over Provide Company solely based
on the percentage of ownership? Which accounting method should be considered for
recording this investment?
b) At minimum, how many shares need to be acquired by Oliver Company for significant
influence to be exercised?
AP-8A (
1
3
)
On March 2, 2016, Taxes Holding, a public company, purchased 15% of the 2,000,000
outstanding common shares issued by Utah Holding at a price of $28.75 per share. This
investment occurred as part of a business alliance agreement between the two companies.
Taxes Holding is planning to hold on to those common shares of Utah Holding for at least 10
years if not longer.
During 2016, the following activities occurred in regards to this investment.
1) On June 30, 2016, Taxes Holding received a cash dividend from Utah Holding for $1.36 per
share.
2) On December 31, 2016, the year-end date of Taxes Holding, Utah Holding common shares
were traded at $29.02 per share.
