Peter Limited Has an Ownership Interest of 80% in a Subsidiary

question 49

Multiple Choice

Peter Limited has an ownership interest of 80% in a subsidiary John Limited. John Limited owns 60% of Joseph Limited. At acquisition date the retained earnings of Joseph Limited were $200 000. At consolidation date, the retained earnings of Joseph Limited were $440 000. The indirect non-controlling interest in the retained earnings of Joseph Limited is calculated as:

• A) $0.
• B) $24 000.
• C) $28 800.
• D) $52 800.

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Definitions:

Payback Period

Payback period is the duration it takes for an investment to recover its initial outlay, measured from the point of investment.

Cash Inflows

All types of cash received by a business, from operations, financing activities, and investments, contributing to its cash pool.

Salvage Value

The calculated leftover value of an asset at the termination of its useful period.

Payback Period

The amount of time it takes for an investment to generate enough cash flow to recover its initial cost.