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MC Question 8
Fork Co owns an 80% investment in Spoon Co which it purchased several years ago.
The goodwill on acquisition was valued at $1,674,000 and there has been no impairment of that goodwill since the date of acquisition.
On 30 September 20X4, Fork Co disposed of its entire investment in Spoon Co, details of which are as follows:
| $’000 | |
|---|---|
| Sales proceeds of Fork Co’s entire investment in Spoon Co | 5,580 |
| Cost of Fork Co’s entire investment in Spoon Co | 3,720 |
Immediately before the disposal, the consolidated financial statements of Fork Co included the following amounts in respect of Spoon Co:
| $’000 | |
|---|---|
| Carrying amount of the net assets (excluding goodwill) | 4,464 |
| Carrying amount of the non-controlling interests | 900 |
What is the profit/loss on disposal (before tax) which will be recorded in Fork Co’s CONSOLIDATED statement of profit or loss for the year ended 30 September 20X4?
A $1,860,000 profit
B $2,016,000 profit
C $342,000 profit
D $558,000 loss