Question: How did they get this answer? On I July 2 0 0 6 Spring Ltd . acquires a ( 2 5 %

How did they get this answer? On I July 2006 Spring Ltd. acquires a \(25\%\) interest in IMax Ltd. for a cash consideration of \(\$ 400,000\). On the date of acquisition, the assets of Max Ltd. are reported at their fair value. The total share capital and reserves of Max Ltd as at the date of acquisition are: Additional information: - For the year ended 30 June 2007, Max Ltd. records an after-tax profit of \$80,000.- A dividend of \$20,000 is paid by Max Ltd. in October 2006, with the dividend being paid from profits earned in the 2005-2006 financial period. - A further dividend of \(\$ 30,000\) is provided by Max Ltd. on 30 June 2007, with the dividend coming from profits earned in the 2006-2007 financial year. What will be the total 'Investment in Max Ltd' at the year end 30 June 2007 under the equity method to show in the consolidated accounts of Spring Ltd.? Select one:a.\(\$ 412,500\)b.\(\$ 407,500\)c.\(\$ 7,500\)d.\(\$ 12,500\)
How did they get this answer? On I July 2 0 0 6

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