Thorpe Ltd owns 70% of the issued share capital of Perkins Ltd.Perkins Ltd owns 80% of the issued share capital of Hackett Ltd and 60% of the issued share capital of Klim Ltd.For the year ended 31 December 20X0 each company reported the following profits/(losses):
$\begin{array} { l c }
& \$ \
\text { Thorpe Ltd } & ( 800000 ) \
\text { Perkins Ltd } & ( 600000 ) \
\text { Hackett Ltd } & 700000 \
\text { Klim Ltd } & 700000
\end{array}$
-What is the amount of the ultimate parent shareholders' interest in Klim Ltd's profit for this financial year?
A)$280 000
B)$294 000
C)$392 000
D)$420 000

Question

Thorpe Ltd owns 70% of the issued share capital of Perkins Ltd.Perkins Ltd owns 80% of the issued share capital of Hackett Ltd and 60% of the issued share capital of Klim Ltd.For the year ended 31 December 20X0 each company reported the following profits/(losses):
$\begin{array} { l c } 
& \$ \
\text { Thorpe Ltd } & ( 800000 ) \
\text { Perkins Ltd } & ( 600000 ) \
\text { Hackett Ltd } & 700000 \
\text { Klim Ltd } & 700000
\end{array}$
-What is the amount of the ultimate parent shareholders' interest in Klim Ltd's profit for this financial year?
A)$280 000
B)$294 000
C)$392 000
D)$420 000

Quizplus · Accepted Answer

Thorpe Ltd indirectly owns 42% of Klim Ltd (70% of 60%). Therefore, the ultimate parent shareholders' interest in Klim Ltd's profit is 42% of $700,000, which equals $294,000.

Thorpe Ltd Owns 70% of the Issued Share Capital of Perkins