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.

Comprehend the role and requirements of the Sarbanes-Oxley Act concerning internal controls and auditor's reports.

Understand the importance of comparing financial data across different periods and with other companies for comprehensive performance analysis.

Recognize the importance and limitations of earnings per share (EPS) as an indicator of company performance.

Grasp the significance of the auditor's report and the different types of audit opinions.

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Definitions:

Liver Size

Refers to the physical dimensions of the liver, an important measure in assessing liver health and detecting abnormalities.

Auscultation

The practice of using a stethoscope to hear the noises produced by the body's internal organs as part of diagnosing health issues.

Bowel Sounds

Noises made by the movement of the intestines, which can be heard during a physical examination and indicate the functioning of the gastrointestinal system.

Vascular Sounds

Sounds made by the blood circulating through the arteries and veins, often assessed using a stethoscope to detect abnormalities.