Portia Ltd

question 31

Multiple Choice

Portia Ltd. acquired 80% of Siro Ltd. on December 31, 20X0. At the acquisition date, Siro's net assets totalled $15,000. Portia uses the cost method to record the acquisition and consolidates using the entity method. At December 31, 20X1, the separate-entity financial statements showed the following:
- During 20X1, Siro sold $7,000 of goods, with a gross margin of 40%, to Portia. At the end of 20X1, $3,000 of the goods were still in Portia's inventory. What portion of consolidated net income for 20X1 is attributable to Portia?

• A)$6,120
• B)$6,240
• C)$6,600
• D)$7,080

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Definitions:

Increasing Latitude

Refers to moving towards higher latitudes, either north or south, away from the equator, typically resulting in cooler climates and changes in daylight hours.

Increasing Elevation

A geographical condition characterized by areas rising to higher altitudes above sea level, often impacting climate, vegetation, and human activities.

Equator

An imaginary line around the middle of the Earth, equally distant from the North and South Poles, dividing the Earth into the Northern and Southern Hemispheres.

Rain Shadow Effect

A climatological phenomenon where one side of a high mountain range receives significant rainfall, while the other side remains dry and desert-like.