Use the following information to calculate the "net income available to ordinary shareholders":

Question

Quizplus · Accepted Answer

To calculate the net income available to ordinary shareholders, we start with the profit after tax ($2,100,000) and subtract:

- Preference dividend ($240,000)
- Corporate tax ($390,000)
- Minority interest ($10,000)
- Transfer to reserves ($600,000)

$2,100,000 - $240,000 - $390,000 - $10,000 - $600,000 = $860,000

Then, we add back:

- Amortization of goodwill ($1,000,000)
- Depreciation ($800,000)
- Deferred tax ($200,000)

$860,000 + $1,000,000 + $800,000 + $200,000 = $2,860,000

Finally, we subtract the preference dividend ($1,000,000) to get the net income available to ordinary shareholders:

$2,860,000 - $1,000,000 = $1,860,000

Therefore, the correct answer is B) $1,860,000.

Use the Following Information to Calculate the "Net Income Available