On July 1 20X5,Helios Ltd Acquired 100,000 Shares in Havers

question 8

Multiple Choice

On July 1 20X5,Helios Ltd acquired 100,000 shares in Havers Ltd for $10 per share.The shares were acquired for trading purposes.During the year ended June 30 20X6,Helios Ltd received a fully franked dividend from Havers Ltd amounting to $60,000.The income tax rate was 30%.At June 30 20X6,the shares were quoted in the market at $9 per share,although the fall in the market price was considered to be only temporary.As a result of this investment,Helios Ltd would:

• A) Report a profit before tax from the investment of $60,000 and report the investment in its balance sheet at June 30 20X6 at an amount of $900,000.
• B) Report a loss before tax from the investment of $40,000 and report the investment in its balance sheet at June 30 20X6 at an amount of $900,000.
• C) Report a profit before tax from the investment of $60,000 and report the investment in its balance sheet at June 30 20X6 at an amount of $1,000,000.
• D) None of the above.

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Definitions:

Negative Externalities

Costs not incurred by consumers or producers but by a third party or the environment, as a result of an economic activity.

Opt Out

The act of choosing not to participate in an activity, service, or agreement, often referring to the decision by an individual or organization to not conform to a standard, policy, or regulation.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive, due to higher market prices.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that sellers are willing to supply.