MCQ

QUESTION 6

1. On 1 July 2016 A Ltd acquired a 25% share of B Ltd. At that date, the following assets had carrying amounts different to their fair values in B Ltd's accounts:

   Asset	Carrying amount	Fair value
   Inventory	$24,000	$30,000
   Machinery	$48,000	$60,000

   All inventory was sold to third parties by 30 June 2017. On 1 July 2016, the machinery had a remaining useful life of 4 years.

   The tax rate is 30%.

   The adjustment required to the investment in associate account at 30 June 2017 in relation to the above assets is:

   		$1,575.
   		$1,800.
   		$6,300.
   		$12,600.

QUESTION 7

1. Lady Ltd owns 25% of Gaga Ltd. Gagas profit after tax for the year ended 30 June 2017 is $50,000. The tax rate is 30%. During the year ended 30 June 2017, Lady sold $10,000 worth of inventory to Gaga. These items had previously cost Lady $7,000. All the items remain unsold by Gaga at 30 June 2017. Ladys share of Gagas profit for the year ended 30 June 2017 is:

   		$11,975.
   		$11,750.
   		$8,225.
   		$9,275.