On 1 July 2017 Fred Ltd acquired 30% of the shares of Barney Ltd for $240 000. At that date, the equity of Barney Ltd was $800 000, with all identifiable assets and liabilities being measured at fair value. Profits/(losses) made since the date of acquisition are as follows: $\begin{array}{|r|r|}\hline \text { Year ended }&\text { Profit/(Loss) } \
\text { 30 June }& \$ \
\hline 2018 & 40000 \
\hline 2019 & (360000) \
\hline 2020 & (500000) \
\hline 2021 & 15000 \
\hline 2022 & 44000 \
\hline
\end{array}$ There have been no dividends paid or movements in reserves since the date of acquisition.
At 30 June 2022 the equity accounted balance of the investment in Barney was:

Question

Quizplus · Accepted Answer

The equity accounted balance of the investment in Barney is $11 700, calculated as follows:Initial investment: $240,000Share of Barney's profits/(losses):2018: 30% x $40,000 = $12,0002019: 30% x ($360,000) = ($108,000)2020: 30% x ($500,000) = ($150,000)2021: 30% x $15,000 = $4,5002022: 30% x $44,000 = $13,200Total share of profits/(losses): ($141,300)Equity accounted balance: $240,000 + ($141,300) = $11,700

On 1 July 2017 Fred Ltd Acquired 30% of the Shares