Arios Ltd, owns 30% of Seravee Ltd. Arios Ltd acquired its ownership interest in Seravee Ltd 2 years ago on 1 July 2015 for $50,000, when the retained earnings balance of Seravee Ltd was $80,000. At this date, all the identifiable assets and liabilities of Seravee Ltd were recorded at fair value. At the end of 30 June 2016, the retained earnings balance in Seravee Ltd was $100,000, and the profit recorded for the 2016-17 period was $50,000. During the 2015-16 period, Arios Ltd sold $6,000 worth of inventory to Seravee Ltd. These items had previously cost Arios Ltd $5,000. All the items remain unsold b Seravee Ltd at 30 June 2016. These were all sold to external customers by 30 June 2017. The tax rate is 20%, both companies have their year-ended day on every 30 June. 3. Applying the equity method, what was Arios Ltd's share in Seravee's profit in 2015-16 period? Select one: OA. 19,200 OB. 20,000 O c. 5,760 O D. 1,000
Arios Ltd, owns 30% of Seravee Ltd. Arios Ltd acquired its ownership interest in Seravee Ltd 2 years ago on 1 July 2015 for $50,000, when the retained earnings balance of Seravee Ltd was $80,000. At this date, all the identifiable assets and liabilities of Seravee Ltd were recorded at fair value. At the end of 30 June 2016, the retained earnings balance in Seravee Ltd was $100,000, and the profit recorded for the 2016-17 period was $50,000. During the 2015-16 period, Arios Ltd sold $6,000 worth of inventory to Seravee Ltd. These items had previously cost Arios Ltd $5,000. All the items remain unsold b Seravee Ltd at 30 June 2016. These were all sold to external customers by 30 June 2017. The tax rate is 20%, both companies have their year-ended day on every 30 June. 3. Applying the equity method, what was Arios Ltd's share in Seravee's profit in 2015-16 period? Select one: OA. 19,200 OB. 20,000 O c. 5,760 O D. 1,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please Correct Solution with Explanation and Do not give solution in image format
Transcribed Image Text:Select one:
OA. 15,240
OB. 14,760
O c. 50,000
O D. 50,800
Q4.
Applying the equity method, what was Arios Ltd's share in Seravee's profit in 2016-17 period?
Q5.
C
Select one:
OA 15,240
OB. 21,000
OC. 70,000
O D. 71.000
D
Show Transcribed Text
G
Applying the equity method, at the end of 30 June 2017, the balance of investment in associate in the consolidated financial statement is:
Transcribed Image Text:This scenario is related to question 3 to 5.
Arios Ltd, owns 30% of Seravee Ltd. Arios Ltd acquired its ownership interest in Seravee Ltd 2 years ago on 1 July 2015 for $50,000, when the retained earnings
balance of Seravee Ltd was $80,000. At this date, all the identifiable assets and liabilities of Seravee Ltd were recorded at fair value.
At the end of 30 June 2016, the retained earnings balance in Seravee Ltd was $100,000, and the profit recorded for the 2016-17 period was $50,000.
During the 2015-16 period, Arios Ltd sold $6,000 worth of inventory to Seravee Ltd. These items had previously cost Arios Ltd $5,000. All the items remain unsold by
Seravee Ltd at 30 June 2016. These were all sold to external customers by 30 June 2017.
The tax rate is 20%, both companies have their year-ended day on every 30 June.
3. Applying the equity method, what was Arios Ltd's share in Seravee's profit in 2015-16 period?
Select one:
O A. 19,200
OB. 20,000
C. 5,760
O D. 1,000
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