Jacaranda Limited acquired a 75% ownership interest in Frangipani Limited on 30 June 20X5. On the same day, Frangipani Limited acquired a 60% ownership interest in Gardener Limited. The following inter-entity transactions have taken place between the entities in the group during the years ended 30 June 20X6 and 30 June 20X7: On 1 July 20X5 Gardener sold an item of plant to Jacaranda for a profit of $25 000. The remaining useful life of the plant at the date of transfer was 2 years.
On 1 September 20X5, Gardener paid a dividend of $100 000 from profits earned prior to 30 June 20X5.
Jacaranda lent $500 000 to Gardener on 1 January 20X6. Interest charged on the loan for the year ended 30 June 20X6 was $20 000 and for the year ended 30 June 20X7 was $40 000.
On 31 May 20X6 Frangipani sold inventories to Gardener for $15 000. Profit earned on the sale was $1500. Gardener sold the inventories to external parties on 1 August 20X6.
Details of profits earned by entities within the group for the years ended 30 June 20X6 and 30 June 20X7 are:

\begin{array} { | l | l | l | } \hline & 30 \text { June 20X6 } & 30 \text { June } 20X7 \\\hline \text { Jacaranda } & 100000 & 125000 \\\hline \text { Frangipani } & 45000 & 70000 \\\hline \text { Gardener } & 20000 & 35000 \\\hline\end{array}

The tax rate is 30%.
The effect of the dividend paid by Gardener to Frangipani on the NCI of Gardener for the year ended 30 June 20X6 is:
A) nil.
B) $15 000.
C) $40 000.
D) $55 000.

In a Group That Has a Multiple Subsidiary Structure, the Indirect

Multiple Choice

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