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Which of the carrying amounts for the investment

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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.

Problem 1: 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?

Select one:

Option 1: $89 000
Option 2: $6 000
Option 3: $91 200
Option 4: $95 000

Reference no: EM132928165

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