Arios Ltd, owns 30% of Seravee Ltd. Arios Ltd acquired its ownership interest in Seravee Ltd...

 

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Arios Ltd, owns 30% of Seravee Ltd. Arios Ltd acquired its ownership interest in Seravee Ltd 2 years ago on 1 July 2015 for $50,000, when the retained earnings balance of Seravee Ltd was $80,000. At this date, all the identifiable assets and liabilities of Seravee Ltd were recorded at fair value. At the end of 30 June 2016, the retained earnings balance in Seravee Ltd was $100,000, and the profit recorded for the 2016-17 period was $50,000. During the 2015-16 period, Arios Ltd sold $6,000 worth of inventory to Seravee Ltd. These items had previously cost Arios Ltd $5,000. All the items remain unsold by Seravee Ltd at 30 June 2016. These were all sold to external customers by 30 June 2017. The tax rate is 20%, both companies have their year-ended day on every 30 June. 3. Applying the equity method, what was Arios Ltd's share in Seravee's profit in 2015-16 period? Applying the equity method, what was Arios Ltd's share in Seravee's profit in 2016-17 period? Arios Ltd, owns 30% of Seravee Ltd. Arios Ltd acquired its ownership interest in Seravee Ltd 2 years ago on 1 July 2015 for $50,000, when the retained earnings balance of Seravee Ltd was $80,000. At this date, all the identifiable assets and liabilities of Seravee Ltd were recorded at fair value. At the end of 30 June 2016, the retained earnings balance in Seravee Ltd was $100,000, and the profit recorded for the 2016-17 period was $50,000. During the 2015-16 period, Arios Ltd sold $6,000 worth of inventory to Seravee Ltd. These items had previously cost Arios Ltd $5,000. All the items remain unsold by Seravee Ltd at 30 June 2016. These were all sold to external customers by 30 June 2017. The tax rate is 20%, both companies have their year-ended day on every 30 June. 3. Applying the equity method, what was Arios Ltd's share in Seravee's profit in 2015-16 period? Applying the equity method, what was Arios Ltd's share in Seravee's profit in 2016-17 period?

Answer rating: 100% (QA)

According to the equity method Arios Ltds share in Seravee Ltds profit is calculated as a proportion ... View the full answer