Reference no: EM132534878

Waratah Ltd acquired a 60% ownership interest in Bottle Brush Ltd on 30 June 20X5. On the same day, Bottle Brush Ltd acquired a 70% ownership interest in Honeydew Ltd.

The following interentity 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 Bottle Brush sold an item of plant to Honeydew for a profit of $20 000. The remaining useful life of the plant at the date of transfer was 4 years.

• On 1 September 20X5, Honeydew paid a dividend of $70 000 from profits earned since 30 June 20X5.
• Waratah lent $50 000 to Bottle Brush on 1 January 20X6. Interest charged on the loan for the year ended 30 June 20X6 was $2000 and for the year ended 30 June 20X7 was $4000.

On 31 May 20X6 Waratah sold inventory to Honeydew for $15 000. Profit earned on the sale was $5000. Honeydew sold the inventory 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:

                                   30 June 20X6                    30 June 20X7

Waratah                        100,000                   125,000

Bottle Brush                       85,000                 70,000

Honeydew                          20,000                  35,000

• The tax rate is 30%.

Question 1: The NCI share of profit in Honeydew for the year ended 30 June 20X7 is