The Following Balances Were Taken from the Accounts of Adelaide

question 58

Multiple Choice

The following balances were taken from the accounts of Adelaide Enterprises.
31 Dec.2013 31 Dec.2014
Assets $450 000 $610 000
Liabilities 270 000 310 000
Assuming there were no drawings or contributions of capital,profit for 2014 must have been:

• A)$160 000.
• B)$120 000.
• C)$300 000.
• D)$220 000.

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Definitions:

Carrying Amount

The book value of assets or liabilities on a company's balance sheet, calculated as the original cost minus any depreciation, amortization, or impairment charges.

Equity Method

A method of accounting whereby the investment is initially recognised at cost and adjusted thereafter for the post-acquisition change in the investor’s share of the investee’s net assets. The investor’s profit or loss includes its share of the investee’s profit or loss and the investor’s other comprehensive income includes its share of the investee’s other comprehensive income.

Investment

An asset or item acquired with the goal of generating income or appreciation over time.

Carrying Amount

The amount at which an asset or liability is recognized in the balance sheet, which can be the historical cost less any depreciation, amortization, or impairment.