Arnold Ltd Holds a 60% Interest in Burford Ltd

question 47

Multiple Choice

Arnold Ltd holds a 60% interest in Burford Ltd. Burford Ltd sells inventory to Arnold Ltd during the year for $10,000. The inventory originally cost $7,000. At the end of the year, 50% of the inventory is still on hand. The tax rate is 30%. The NCI share of net income adjustment required, in relation to this transaction, is a decrease of:

• A)NIL.
• B)$420.
• C)$630.
• D)$1,050.

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Definitions:

Highest Profit

The maximum financial gain that can be achieved from business activities after subtracting all relevant costs and expenses.

Competitive Quantity

Indicates the amount of product or service offered by businesses in a competitive market scenario, aimed at achieving optimum market share.

Natural Monopoly

A market condition where a single firm can supply a good or service to an entire market at a lower cost than two or more firms.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the total quantity of output.