Commonwealth Consolidated Acts Commonwealth Consolidated ActsIf the entity is an * inward investor (financial) for the income year, the worldwide gearing debt amount is the result of applying the method statement in this section.
Method statement
Step 1. Divide the entity's * statement worldwide debt for the income year by the entity's * statement worldwide equity for that year.
Step 2. Add 1 to the result of step 1.
Step 3. Divide the result of step 1 by the result of step 2.
Step 4. Multiply the result of step 3 in this method statement by the result of step 5 in the method statement in subsection 820 - 210(2).
Step 5. Add to the result of step 4 the average value, for that year, of the entity's * zero - capital amount that has arisen because of the Australian investments mentioned in step 1 of the method statement in subsection 820 - 210(2).
Step 6. Add to the result of step 5 the average value, for that year, of the entity's * associate entity excess amount. The result of this step is the worldwide gearing debt amount .
Example: MSR Limited, a company that is not an Australian entity, has investments in Australia. MSR Limited has statement worldwide debt of $90 million and statement worldwide equity of $30 million. The result of applying step 1 is therefore 3. Dividing 3 by 4 (through applying steps 2 and 3) and multiplying the result by $100 million (which is the result of step 5 of the method statement in subsection 820 - 210(2)) equals $75 million. The zero - capital amount is $5 million. Adding that amount to $75 million results in $80 million. As the company does not have any associate entity excess amount, the worldwide gearing debt amount is therefore $80 million.