The Following Information Relates to Questions
on 1 July

question 19

Multiple Choice

The following information relates to questions
On 1 July 2013 Joey Ltd acquired 25% of the shares of Leo Ltd for £100 000. At that date the equity of Leo Ltd was £400 000, with all identifiable assets and liabilities being measured at fair value. Profits/(losses) made since the date of acquisition are as follows:
$$\begin{array} { | c | c | } \hline \begin{array} { c } \text { Year ended } \\\text { 30 June }\end{array} & \begin{array} { c } \text { Prafit(Lass) } \\\mathbf { £ }\end{array} \\\hline 20 \times 5 & 20,000 \\\hline 20 \times 6 & ( 200,000 ) \\\hline 20 \times 7 & ( 250,000 ) \\\hline 20 \times 1 & 16,000 \\\hline 20 \times 9 & 20,000 \\\hline\end{array}$$
There have been no dividends paid or movements in reserves since the date of acquisition.
-At 30 June 20X7 the equity accounted balance of the investment in Leo was:

• A) NIL
• B) (£3500)
• C) £4000
• D) £16 000

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Definitions:

Spirilla

A genus of spiral-shaped bacteria, some of which are known to cause diseases in humans.

Viruses

Infectious agents that replicate only inside the living cells of an organism, which can cause a variety of diseases in humans, animals, and plants.

Budding

A form of asexual reproduction in which a new organism develops from an outgrowth or bud due to cell division at one particular site.

Bacilli

Rod-shaped bacteria that can be found in various environments, some of which are pathogenic to humans.