On July 1 20X3,a Parent Entity,Delta Ltd Acquired 20% of the Share

question 33

Multiple Choice

On July 1 20X3,a parent entity,Delta Ltd acquired 20% of the share capital of Rimfire Ltd and the power to exert significant influence over that company's decision making processes for a cash outlay of $1,800,000.At relevant dates,the shareholders' equity of Rimfire Ltd at June 30 was (amounts in thousands) : Additional information:
I.No dividends have been paid by Rimfire Ltd out of pre-acquisition profits.
II.At June 30 20X6,Delta Ltd held inventories,which had been supplied by Rimfire Ltd at a mark-up of $100,000.
III.During the year ended June 30 20X7,Rimfire Ltd earned a profit for the year of $600,000 (after income tax of $200,000) and paid a dividend of $250,000.
IV.The income tax rate was 30%.
V.Any goodwill on acquisition has not been impaired since acquisition.
In the consolidated balance sheet at June 30 20X7 of the group controlled by Delta Ltd,the investment in Rimfire Ltd would be reported at an amount of:

• A) $2,150,000
• B) $2,164,000
• C) $2,200,000
• D) None of the above.

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Definitions:

Conditioned Stimulus

A stimulus that elicits a response only after learning has taken place, typically through association with an unconditioned stimulus.

Unconditioned Stimulus

A stimulus that naturally and automatically triggers a response without any need for prior learning or conditioning.

Unconditioned Response

An involuntary, inherent reaction to a stimulus, occurring without any learned or conditioned prior history.

Unconditioned Response

An automatic and natural reaction to a stimulus that does not require learning.