Rose Ltd Acquired a 75 Per Cent Interest in Daisy

Multiple Choice

Rose Ltd acquired a 75 per cent interest in Daisy Ltd on 1 July 2014 for a cash consideration of €758 000.On the same date,Daisy Ltd acquired a 56 per cent interest in Tulip Ltd for a cash consideration of €534 000.The fair value of the net assets of each of the companies at acquisition is as follows: $$\begin{array} { | l | r | r | } \hline & \text { Daisy Ltd } & \text { Tulip Ltd } \\\hline \text { Share capital } & 900000 & 860000 \\\hline \text { Retained earnings } & \underline { 85000 } & \underline { 40000 } \\\hline & 985000 & 900000 \\\hline\end{array}$$ Goodwill has been determined not to have been impaired.Using the multiple entity consolidation approach,what would the analysis of direct and indirect interests in the subsidiaries and the elimination entries be for the consolidation for 30 June 2015?

A) $$\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Daisy Ltd } \\\text { (\% interest) }\end{array} & \begin{array} { r } \text { Tulip Ltd } \\\text { (\% interest) }\end{array} \\\hline \text { Rose Ltd's interest: } & & \\\hline \text { Direct } & 75 & 56 \\\hline \text { Indirect } & & \\\hline & & \\\hline \text { Outside equity interest: } & & \\\hline \text { Direct } & 25 &44 \\\hline \text { Indirect } & & \\\hline\end{array}$$ $$\begin{array}{l}\text { Elimination entries: }\\\begin{array} { | c | l | r | r | } \hline \mathrm { Dr } & \text { Share capital } & 900000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 85000 & \\\hline \mathrm { Dr } & \text { Goodwill } & 19000 & \\\hline \mathrm { Cr } & \text { Outside equity interest } & & 246000 \\\hline \mathrm { Cr } & \text { Investment in Daisy } & & 758000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Share capital } & 860000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 40000 & \\\hline \mathrm { Dr } & \text { Goodwill } & 30000 & \\\hline \mathrm { Cr } & \text { Outside equity interest } & & 396000 \\\hline \mathrm { Cr } & \text { Investment in Tulip } & & 534000 \\\hline\end{array}\end{array}$$
B) $$\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Daisy Ltd } \\\text { (\% interest) }\end{array} & \begin{array} { r } \text { Tulip Ltd } \\\text { (\% interest) }\end{array} \\\hline \text { Rose Ltd's interest: } & & \\\hline \text { Direct } & 75 &44 \\\hline \text { Indirect } & & \\\hline & & \\\hline \text { Outside equity interest: } & & \\\hline \text { Direct } & 25 & 14 \\\hline \text { Indirect } & & 42 \\\hline\end{array}$$ $$\begin{array} { | c | l | l | l | } \hline \text { Elimination entries: } & & \\\hline \text { Dr } & \text { Share capital } & 675000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 63750 & \\\hline \text { Dr } & \text { Goodwill } & 19250 & \\\hline \mathrm { Cr } & \text { Investment in Daisy } & & 758000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Share capital } & 378400 & \\\hline \text { Dr } & \text { Retained earnings } & 17600 & \\\hline \mathrm { Dr } & \text { Goodwill } & 138000 & \\\hline \mathrm { Cr } & \text { lnvestment in Tulip } & & 534000 \\\hline\end{array}$$
C) $$\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Daisy Ltd } \\\text { (\% interest) }\end{array} & \begin{array} { r } \text { Tulip Ltd } \\\text { (\% interest) }\end{array} \\\hline \text { Rose Ltd's interest: } & & \\\hline \text { Direct } & 75 & \\\hline \text { Indirect } & & 42\\\hline & & \\\hline \text { Outside equity interest: } & & \\\hline \text { Direct } &25 &44 \\\hline \text { Indirect } & & 14 \\\hline\end{array}$$ $$\begin{array} { | c | l | r | r | } \hline \text { Elimination entries: } & & \\\hline \text { Dr } & \text { Share capital } & 675000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 63750 & \\\hline \text { Dr } & \text { Goodwill } & 19250 & \\\hline \mathrm { Cr } & \text { Investment in Daisy } & & 758000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Share capital } & 481600 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 22400 & \\\hline \mathrm { Dr } & \text { Goodwill } & 30000 & \\\hline \mathrm { Cr } & \text { lnvestment in Tulip } & & 534000 \\\hline\end{array}$$
D) $$\begin{array} { | l | r | r | } \hline \text { Analysis of equity interests: } & \begin{array} { r } \text { Daisy Ltd } \\\text { (\% interest) }\end{array} & \begin{array} { r } \text { Tulip Ltd } \\\text { (\% interest) }\end{array} \\\hline \text { Rose Ltd's interest: } & & \\\hline \text { Direct } & 75 & \\\hline \text { Indirect } & &42 \\\hline & & \\\hline \text { Outside equity interest: } & & \\\hline \text { Direct } & 25&14 \\\hline \text { Indirect } & & 44 \\\hline\end{array}$$ $$\begin{array} { | c | l | r | r | } \hline \text { Elimination entries: } & & \\\hline \text { Dr } & \text { Share capital } & 675000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 63750 & \\\hline \text { Dr } & \text { Goodwill } & 19250 & \\\hline \mathrm { Cr } & \text { Investment in Daisy } & & 758000 \\\hline & & & \\\hline \mathrm { Dr } & \text { Share capital } & 361200 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 16800 & \\\hline \mathrm { Dr } & \text { Goodwill } & 156000 & \\\hline \mathrm { Cr } & \text { lnvestment in Tulip } & & 534000 \\\hline\end{array}$$