ABC owns 30% of MELY, which it purchased on 1 January 20X7 for $5,000,000. At that date, MELY had retained earnings of $10,600,000. At the year end date of 31 December 20X1, MELY had retained earnings of $12,800,000 after paying out a dividend of $2,000,000. On 30 November 20X1, ABC sold $1,400,000 original cost of goods to MELY, on which it made 30% profit. MELY had resold none of these goods by 31 December 20X1. ABC equity accounted its only associate MELY. The "investment in associate" in ABC consolidated statement of financial position as at 31 December 20x1 will report: (PLEASE EXPLAIN THE ANSWER) A) $5,660,000 B) $4,934,000 C) $5,534,000 D) $5,240,000 E) None of the above
ABC owns 30% of MELY, which it purchased on 1 January 20X7 for $5,000,000. At that date, MELY had retained earnings of $10,600,000. At the year end date of 31 December 20X1, MELY had retained earnings of $12,800,000 after paying out a dividend of $2,000,000. On 30 November 20X1, ABC sold $1,400,000 original cost of goods to MELY, on which it made 30% profit. MELY had resold none of these goods by 31 December 20X1. ABC equity accounted its only associate MELY. The "investment in associate" in ABC consolidated statement of financial position as at 31 December 20x1 will report: (PLEASE EXPLAIN THE ANSWER) A) $5,660,000 B) $4,934,000 C) $5,534,000 D) $5,240,000 E) None of the above
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter13: Corporations: Earning & Profits And Distributions
Section: Chapter Questions
Problem 19P
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Question
ABC owns 30% of MELY, which it purchased on 1 January 20X7 for $5,000,000. At that date, MELY had
On 30 November 20X1, ABC sold $1,400,000 original cost of goods to MELY, on which it made 30% profit. MELY had resold none of these goods by 31 December 20X1.
ABC equity accounted its only associate MELY.
The "investment in associate" in ABC consolidated
(PLEASE EXPLAIN THE ANSWER)
A) $5,660,000
B) $4,934,000
C) $5,534,000
D) $5,240,000
E) None of the above
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