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Compute the carrying amounts for the investment

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Reference no: EM132842805

Question - Ford Limited acquired a 15% share in Telsa Limited for $89 000. Ford Limited has no other investments. At the date on which it became an associate, Telsa had the following equity:

Share capital $200 000

Retained earnings $40 000.

At the end of the financial year following the investment, Tesla Limited generated a profit after tax of $40 000. After applying the equity method of accounting, Ford will have which of the following carrying amounts for the investment?

a. $6,000

b. $95,000

c. $89,000

d. $91,200

Reference no: EM132842805

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