New Ltd acquired all the issued share capital of Orleans Ltd on 1 February 20X1.Orleans Ltd's shareholders equity (all at fair value) at that date was as follows: $\begin{array}{llcc} & \text {000s } & \\ \text {Paid up capital } &\$4000\\ \text {Retained profits } &\$1000\\ \text { Asset revaluation reserve } &\$2000\\ \end{array}$ If New Ltd paid $8 000 000 for this acquisition what is the substitution elimination entry if consolidated financial statements were prepared on 1 February 20X1?

A) $\begin{array} { l r r } \text { Accounts } & \text { Debit } \mathbf { \$ 0 0 0 } & \text { Credit } \$ \mathbf { 0 0 0 } \\ \text { Paid up capital } & 4000 \\ \text { Retained profits } & 1000 \\ \text { Asset revaluation reserve } & 2000 \\ \text { Goodwill } & 1000 \end{array}$ B) $\begin{array} { l r r } \text { Accounts } & \text { Debit } \$ \mathbf { 0 0 0 } & \text { Credit } \$ \mathbf { 0 0 0 } \\ \text { Paid up capital } & 4000 & \\ \text { Retained profits } & 1000 & \\ \text { Asset revaluation reserve } & 2000 & \\ \text { Goodwill } & 1000 & \\ \text { Investment in Orleans Ltd } & & 8000 \end{array}$ C) $\begin{array} { l r r } \text { Accounts } & \text { Debit } \$ \mathbf { 0 0 0 } & \text { Credit } \$ \mathbf { 0 0 0 } \\ \text { Paid up capital } & 4000 & \\ \text { Retained profits } & 1000 & \\ \text { Asset revaluation reserve } & 2000 & \\ \text { Investment in Orleans Ltd } & &7000 \end{array}$ D) $\begin{array}{lrr} \text { Accounts } & \text { Debit } \$ \mathbf{0 0 0} & \text { Credit } \$ \mathbf{0 0 0} \\ \text { Paid up capital } & 4000 & \\ \text { Retained profits } & 1000 & \\ \text { Asset revaluation reserve } & 2000 & \\ \text { Acquisition expense } & 1000 & \\ \text { Bank } & & 8000 \end{array}$ A) $\begin{array} { l r r } \text { Accounts } & \text { Debit } \mathbf { \$ 0 0 0 } & \text { Credit } \$ \mathbf { 0 0 0 } \\ \text { Paid up capital } & 4000 \\ \text { Retained profits } & 1000 \\ \text { Asset revaluation reserve } & 2000 \\ \text { Goodwill } & 1000 \end{array}$ B) $\begin{array} { l r r } \text { Accounts } & \text { Debit } \$ \mathbf { 0 0 0 } & \text { Credit } \$ \mathbf { 0 0 0 } \\ \text { Paid up capital } & 4000 & \\ \text { Retained profits } & 1000 & \\ \text { Asset revaluation reserve } & 2000 & \\ \text { Goodwill } & 1000 & \\ \text { Investment in Orleans Ltd } & & 8000 \end{array}$ C) $\begin{array} { l r r } \text { Accounts } & \text { Debit } \$ \mathbf { 0 0 0 } & \text { Credit } \$ \mathbf { 0 0 0 } \\ \text { Paid up capital } & 4000 & \\ \text { Retained profits } & 1000 & \\ \text { Asset revaluation reserve } & 2000 & \\ \text { Investment in Orleans Ltd } & &7000 \end{array}$ D) $\begin{array}{lrr} \text { Accounts } & \text { Debit } \$ \mathbf{0 0 0} & \text { Credit } \$ \mathbf{0 0 0} \\ \text { Paid up capital } & 4000 & \\ \text { Retained profits } & 1000 & \\ \text { Asset revaluation reserve } & 2000 & \\ \text { Acquisition expense } & 1000 & \\ \text { Bank } & & 8000 \end{array}$ B

Lee-Ann Ltd acquired all the voting shares in Pamela Ltd. At the time of the takeover the following amounts are relevant: $\begin{array}{c} \begin{array}{lll} \text { Recorded by Pamela }\\ \text { Property}\\ \text { }\\ \text {Intangible patent }\\ \text { Accounts receivable }\\ \text { }\\ \text { Vehicles }\\ \text { }\\ \text { }\\ \text { }\\ \text { }\\ \text { Accum. depreciation }\\ \text { vehicles }\\ \text { Inventory }\\ \end{array} \begin{array}{lll} \$\\ \text {7500 } \\ \text { }\\ \text { 0 }\\ \text {30000 }\\ \text { }\\ 120000\\ \\ \\ \\ \\ 24000\\ \\ 85000\\ \end{array} \begin{array}{lll} \text { Comments}\\ \text { valued at cost, fair value is \( \$ 90000 $. }\\ \text { Group policy is to use the revaluation model. }\\ \text { not recognised, but valued by Lee-Ann at $ \$ 30000 $ }\\ \text {estimated uncollectible debts are thought to be $ \$ 10000 $ }\\ \text { higher than those recorded.}\\ \text { straight line depreciation is used by Pamela. }\\ \text {Group policy is for reducing balance. }\\ \text {However, no other group member has }\\ \text { vehicles of this specialist kind and straight-line is thought to be a reasonable method. }\\ \text { Vehicles have ten year life. }\\ \text { vehicles purchased two years ago, no scrap value. }\\ \text { }\\ \text {discovered to be over-valued by $ \$ 10000 $, due to an erro }\\ \end{array} \end{array}\) -With regard to accounts receivable, which is the correct consolidation adjustment entry at control date?

A) Dr bad debts expense $10 000; credit accounts receivable B) Dr fair value reserve $10 000; credit allowance for doubtful debts C) Dr bad debts expense $10 000; credit allowance for doubtful debts D) No entry required A) Dr bad debts expense $10 000; credit accounts receivable B) Dr fair value reserve $10 000; credit allowance for doubtful debts C) Dr bad debts expense $10 000; credit allowance for doubtful debts D) No entry required C

Lee-Ann Ltd acquired all the voting shares in Pamela Ltd. At the time of the takeover the following amounts are relevant: $\begin{array}{c} \begin{array}{lll} \text { Recorded by Pamela }\\ \text { Property}\\ \text { }\\ \text {Intangible patent }\\ \text { Accounts receivable }\\ \text { }\\ \text { Vehicles }\\ \text { }\\ \text { }\\ \text { }\\ \text { }\\ \text { Accum. depreciation }\\ \text { vehicles }\\ \text { Inventory }\\ \end{array} \begin{array}{lll} \$\\ \text {7500 } \\ \text { }\\ \text { 0 }\\ \text {30000 }\\ \text { }\\ 120000\\ \\ \\ \\ \\ 24000\\ \\ 85000\\ \end{array} \begin{array}{lll} \text { Comments}\\ \text { valued at cost, fair value is \( \$ 90000 $. }\\ \text { Group policy is to use the revaluation model. }\\ \text { not recognised, but valued by Lee-Ann at $ \$ 30000 $ }\\ \text {estimated uncollectible debts are thought to be $ \$ 10000 $ }\\ \text { higher than those recorded.}\\ \text { straight line depreciation is used by Pamela. }\\ \text {Group policy is for reducing balance. }\\ \text {However, no other group member has }\\ \text { vehicles of this specialist kind and straight-line is thought to be a reasonable method. }\\ \text { Vehicles have ten year life. }\\ \text { vehicles purchased two years ago, no scrap value. }\\ \text { }\\ \text {discovered to be over-valued by $ \$ 10000 $, due to an erro }\\ \end{array} \end{array}\) -With regard to the patent, which is the correct consolidation adjustment entry at control date?

A) Dr patent $30 000; credit asset revaluation reserve B) Dr patent $30 000; credit fair value reserve C) No adjustment entry required. D) Dr patent $30 000; credit consolidated profit or loss A) Dr patent $30 000; credit asset revaluation reserve B) Dr patent $30 000; credit fair value reserve C) No adjustment entry required. D) Dr patent $30 000; credit consolidated profit or loss

Lee-Ann Ltd acquired all the voting shares in Pamela Ltd. At the time of the takeover the following amounts are relevant: $\begin{array}{c} \begin{array}{lll} \text { Recorded by Pamela }\\ \text { Property}\\ \text { }\\ \text {Intangible patent }\\ \text { Accounts receivable }\\ \text { }\\ \text { Vehicles }\\ \text { }\\ \text { }\\ \text { }\\ \text { }\\ \text { Accum. depreciation }\\ \text { vehicles }\\ \text { Inventory }\\ \end{array} \begin{array}{lll} \$\\ \text {7500 } \\ \text { }\\ \text { 0 }\\ \text {30000 }\\ \text { }\\ 120000\\ \\ \\ \\ \\ 24000\\ \\ 85000\\ \end{array} \begin{array}{lll} \text { Comments}\\ \text { valued at cost, fair value is \( \$ 90000 $. }\\ \text { Group policy is to use the revaluation model. }\\ \text { not recognised, but valued by Lee-Ann at $ \$ 30000 $ }\\ \text {estimated uncollectible debts are thought to be $ \$ 10000 $ }\\ \text { higher than those recorded.}\\ \text { straight line depreciation is used by Pamela. }\\ \text {Group policy is for reducing balance. }\\ \text {However, no other group member has }\\ \text { vehicles of this specialist kind and straight-line is thought to be a reasonable method. }\\ \text { Vehicles have ten year life. }\\ \text { vehicles purchased two years ago, no scrap value. }\\ \text { }\\ \text {discovered to be over-valued by $ \$ 10000 $, due to an erro }\\ \end{array} \end{array}\) -With regard to inventory, which is the correct consolidation adjustment entry at control date?

A) Dr inventory expense $10 000; credit inventory B) Dr inventory expense $10 000; credit fair value reserve C) Dr fair value reserve $10 000; credit inventory D) No entry required A) Dr inventory expense $10 000; credit inventory B) Dr inventory expense $10 000; credit fair value reserve C) Dr fair value reserve $10 000; credit inventory D) No entry required

Eagle Ltd acquired all the issued share capital of Rock Ltd on 1 May 20X1.Rock Ltd's shareholders equity (all at fair value) at that date was as follows: $\begin{array}{llcc} &\text { 000s} & \\ \text { Paid up capital } &\$3000\\ \text {General reserve } &\$1000\\ \text { Retained profits } &\$500\\ \end{array}$ What was the cost of acquisition incurred by Eagle Ltd, if the bargain purchase gain was $250 000?

A) $4 750 000 B) $3 750 000 C) $3 250 000 D) $4 250 000 A) $4 750 000 B) $3 750 000 C) $3 250 000 D) $4 250 000

Petroni Ltd acquired all the issued share capital of Wallace Ltd on 1 April 20X1.Wallace Ltd's shareholders equity (all at fair value) at that date was as follows: $\begin{array}{llcc} &\text { 000s} & \\ \text { Paid up capital } &\$3000\\ \text {General reserve } &\$1000\\ \text { Retained profits } &\$500\\ \end{array}$ What was the cost of acquisition (that is, the control date fair value of the consideration provided) to Petroni Ltd, if consolidation goodwill resulting from the business combination (purchased goodwill) of $500 000 was recognised in the consolidated financial statements prepared on 1 April 20X1?

A) $500 000 B) $5 000 000 C) $4 000 000 D) $4 500 000 A) $500 000 B) $5 000 000 C) $4 000 000 D) $4 500 000

Lee-Ann Ltd acquired all the voting shares in Pamela Ltd. At the time of the takeover the following amounts are relevant: $\begin{array}{c} \begin{array}{lll} \text { Recorded by Pamela }\\ \text { Property}\\ \text { }\\ \text {Intangible patent }\\ \text { Accounts receivable }\\ \text { }\\ \text { Vehicles }\\ \text { }\\ \text { }\\ \text { }\\ \text { }\\ \text { Accum. depreciation }\\ \text { vehicles }\\ \text { Inventory }\\ \end{array} \begin{array}{lll} \$\\ \text {7500 } \\ \text { }\\ \text { 0 }\\ \text {30000 }\\ \text { }\\ 120000\\ \\ \\ \\ \\ 24000\\ \\ 85000\\ \end{array} \begin{array}{lll} \text { Comments}\\ \text { valued at cost, fair value is \( \$ 90000 $. }\\ \text { Group policy is to use the revaluation model. }\\ \text { not recognised, but valued by Lee-Ann at $ \$ 30000 $ }\\ \text {estimated uncollectible debts are thought to be $ \$ 10000 $ }\\ \text { higher than those recorded.}\\ \text { straight line depreciation is used by Pamela. }\\ \text {Group policy is for reducing balance. }\\ \text {However, no other group member has }\\ \text { vehicles of this specialist kind and straight-line is thought to be a reasonable method. }\\ \text { Vehicles have ten year life. }\\ \text { vehicles purchased two years ago, no scrap value. }\\ \text { }\\ \text {discovered to be over-valued by $ \$ 10000 $, due to an erro }\\ \end{array} \end{array}\) -With regard to property, which is the correct consolidation adjustment entry at control date?

A) Dr property $15 000; credit asset revaluation reserve B) Dr property $15 000; credit fair value reserve C) No adjustment entry required. D) Dr property $15 000; credit consolidated profit or loss A) Dr property $15 000; credit asset revaluation reserve B) Dr property $15 000; credit fair value reserve C) No adjustment entry required. D) Dr property $15 000; credit consolidated profit or loss

Lee-Ann Ltd acquired all the voting shares in Pamela Ltd. At the time of the takeover the following amounts are relevant: $\begin{array}{c} \begin{array}{lll} \text { Recorded by Pamela }\\ \text { Property}\\ \text { }\\ \text {Intangible patent }\\ \text { Accounts receivable }\\ \text { }\\ \text { Vehicles }\\ \text { }\\ \text { }\\ \text { }\\ \text { }\\ \text { Accum. depreciation }\\ \text { vehicles }\\ \text { Inventory }\\ \end{array} \begin{array}{lll} \$\\ \text {7500 } \\ \text { }\\ \text { 0 }\\ \text {30000 }\\ \text { }\\ 120000\\ \\ \\ \\ \\ 24000\\ \\ 85000\\ \end{array} \begin{array}{lll} \text { Comments}\\ \text { valued at cost, fair value is \( \$ 90000 $. }\\ \text { Group policy is to use the revaluation model. }\\ \text { not recognised, but valued by Lee-Ann at $ \$ 30000 $ }\\ \text {estimated uncollectible debts are thought to be $ \$ 10000 $ }\\ \text { higher than those recorded.}\\ \text { straight line depreciation is used by Pamela. }\\ \text {Group policy is for reducing balance. }\\ \text {However, no other group member has }\\ \text { vehicles of this specialist kind and straight-line is thought to be a reasonable method. }\\ \text { Vehicles have ten year life. }\\ \text { vehicles purchased two years ago, no scrap value. }\\ \text { }\\ \text {discovered to be over-valued by $ \$ 10000 $, due to an erro }\\ \end{array} \end{array}\) -With regard to vehicles, which is the correct consolidation adjustment entry at control date?

A) Dr accumulated depreciation $1200; credit depreciation expense B) Dr accumulated depreciation $1200; credit fair value reserve C) Dr accumulated depreciation $24 000; credit vehicles D) No entry required A) Dr accumulated depreciation $1200; credit depreciation expense B) Dr accumulated depreciation $1200; credit fair value reserve C) Dr accumulated depreciation $24 000; credit vehicles D) No entry required