On January 1 20X7,a Parent Entity Emborough Ltd Acquired 20

question 37

Multiple Choice

On January 1 20X7,a parent entity Emborough Ltd acquired 20% of the share capital of Bernborough Ltd and the power to significantly influence the operating and financial policies of that company for $4,500,000 cash.In the period from the date of acquisition to June 30 20X7,Bernborough Ltd earned a profit for the period of $400,000 (after tax of $200,000) ,recognised a post-acquisition asset revaluation increment of $500,000 (deferred tax liability $100,000) and declared a dividend of $200,000.At June 30 20X7,Emborough Ltd recognised its equity in the dividend. In the consolidated balance sheet as at June 30 20X7 of the group controlled by Emborough Ltd,the investment in the associate would be reported at an amount of:

• A) $4,620,000
• B) $4,500,000
• C) $4,680,000
• D) None of the above.

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Definitions:

Skip-Generation

A household where a child or children live with their grandparents without a parent present.

Sandwich Generation

The middle generation in a multigenerational household, which often struggles balancing caring for aging parents while caring for children.

Boomerang Generation

Term used to describe those young adults who return to their parental home after leaving for education, work, or a relationship.

Blended Family

A family unit composed of a couple and their children from this and all previous relationships, creating a complex network of relationships.