On 1 July 2014. Ark Ltd acquired a 30% interest in Sign Ltd for $54,929,000. During the year ended 30 June 2015 Sign Ltd reported a profit (after tax) of $7,500,000 and Ark sold inventory to Sign Ltd at a markup of $180,000, 60% of this inventory was not sold by Sign Ltd and remained on hand as of 30 June 2015. Other information: Ark has significant influence over Sign Ltd. Ark Ltd has several subsidiaries and prepares consolidated financial statements. Investments in associates are recorded at cost in the single entity financial statements of Ark Ltd and using the equity method in the consolidated financial statements at the Ark Ltd Group. The tax rate is 30%. Required: Calculate the Share of Profits of Sign Ltd in the consolidated financial statements of the Ark Ltd Group for the year ended 30 June 2015. A. $1,034,964 B. $2,217,780 C. None of the other answer options is correct. D. $2,227,446 E. $2,250,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On 1 July 2014. Ark Ltd acquired a 30% interest in Sign Ltd for $54,929,000. During the year
ended 30 June 2015 Sign Ltd reported a profit (after tax) of $7,500,000 and Ark sold inventory to
Sign Ltd at a markup of $180,000, 60% of this inventory was not sold by Sign Ltd and remained
on hand as of 30 June 2015.
Other information:
Ark has significant influence over Sign Ltd.
Ark Ltd has several subsidiaries and prepares consolidated financial statements.
Investments in associates are recorded at cost in the single entity financial statements of Ark Ltd
and using the equity method in the consolidated financial statements at the Ark Ltd Group.
The tax rate is 30%.
Required: Calculate the Share of Profits of Sign Ltd in the consolidated financial statements of the
Ark Ltd Group tor the year ended 30 June 2015.
A. $1,034,964
B. $2,217,780
C. None of the other answer options is correct.
D. $2,227,446
E. $2,250,000
Transcribed Image Text:On 1 July 2014. Ark Ltd acquired a 30% interest in Sign Ltd for $54,929,000. During the year ended 30 June 2015 Sign Ltd reported a profit (after tax) of $7,500,000 and Ark sold inventory to Sign Ltd at a markup of $180,000, 60% of this inventory was not sold by Sign Ltd and remained on hand as of 30 June 2015. Other information: Ark has significant influence over Sign Ltd. Ark Ltd has several subsidiaries and prepares consolidated financial statements. Investments in associates are recorded at cost in the single entity financial statements of Ark Ltd and using the equity method in the consolidated financial statements at the Ark Ltd Group. The tax rate is 30%. Required: Calculate the Share of Profits of Sign Ltd in the consolidated financial statements of the Ark Ltd Group tor the year ended 30 June 2015. A. $1,034,964 B. $2,217,780 C. None of the other answer options is correct. D. $2,227,446 E. $2,250,000
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