Determine the carrying value of the investment in nutro inc

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Reference no: EM131340659

Dolo Inc acquired a 40 per cent interest in the ordinary shares of Nutro Inc on the date of incorporation, 1 January 2000, for an amount of EUR 220,000. This enabled Dolo Inc to exercise significant influence over Nutro Inc. On 31 December 2003, the shareholders' equity of Nutro Inc was as follows:

	EUR
Ordinary issued share capital	550,000
Reserves	180,000
Retained earnings	650,000
	1,380,000

The following extracts were taken from the financial statements of Nutro Inc for the year ending 31 December 2004:

	EUR
Income Statement (extract)
Profit after tax	228,000
Extraordinary item	(12,000)
Net profit for the period	216,000

Statement of changes in equity(extract)
Accumulated profits at beginning of the year	650,000
Net profit for the period	216,000
Dividends paid	(80,000)
Accumulated profits at end of the year	786,000

In November 2004, Dolo Inc sold inventories to Nutro Inc for the first time. The total sales amounted to EUR 50,000 and Dolo Inc earned a profit of EUR 10,000 on that transaction. None of the inventories had been sold by Nutro Inc by 31 December 2004. The income tax rate is 30 per cent.

Determine the carrying value of the investment in Nutro Inc as at 31 December 2004.

Reference no: EM131340659

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