If the entity is an * inward investor (general) 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 4 in the method statement in section 820 - 205.
Step 5. Add to the result of step 4 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: MLO Limited, a company that is not an Australian entity, has investments in Australia. MLO Limited has statement worldwide debt of $120 million and statement worldwide equity of $40 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 $75 million (which is
the result of step 4 of the method statement in section 820 - 205)
equals $56.25 million. As the average value of the company's associate
entity excess amount is $4 million, the worldwide gearing debt amount is
therefore $60.25 million.