Waratah Ltd Acquired a 60% Ownership Interest in Bottle Brush

question 27

Multiple Choice

Waratah Ltd acquired a 60% ownership interest in Bottle Brush Ltd on 30 June 20X5. On the same day, Bottle Brush Ltd acquired a 70% ownership interest in Honeydew Ltd. The following inter-entity transactions have taken place between the entities in the group during the years ended 30 June 20X6 and 30 June 20X7.
On 1 July 20X5 Bottle Brush sold an item of plant to Honeydew for a profit of $20 000.
The remaining useful life of the plant at the date of transfer was 4 years.
-On 1 September 20X5, Honeydew paid a dividend of $70 000 from profits earned since 30 June 20X5.
-Waratah lent $50 000 to Bottle Brush on 1 January 20X6. Interest charged on the loan for the year ended 30 June 20X6 was $2000 and for the year ended 30 June 20X7 was $4000.
On 31 May 20X6 Waratah sold inventories to Honeydew for $15 000. Profit earned on the sale was $5000. Honeydew sold the inventories to external parties on 1 August 20X6.
Details of profits earned by entities within the group for the years ended 30 June 20X6 and 30 June 20X7 are:
$$\begin{array} { | l | l | l | } \hline & 30 \text { June 20X6 } & 30 \text { June } 20 \times 7 \\\hline \text { Waratah } & 100000 & 125000 \\\hline \text { Bottle Brush } & 85000 & 70000 \\\hline \text { Honeydew } & 20000 & 35000 \\\hline\end{array}$$ The tax rate is 30%.
The NCI share of profit in Honeydew for the year ended 30 June 20X7 is:

• A) $9800.
• B) $10 500.
• C) $20 300.
• D) $22 330.

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Definitions:

Self-Discipline

The ability to control one's feelings, impulses, and actions to pursue long-term goals, often requiring personal sacrifice and self-management.

Clan Control

A form of organizational control based on shared values, expectations, traditions, and cultural norms.

Organisational Culture

The shared values, beliefs, and practices that shape how work is done and how people interact within an organization.

Feedforward Control System

A proactive management approach that aims to prevent future problems through the anticipation and adjustment of processes.