On 1 July 2012,Mawson Ltd Acquires All Shares in Mountain

Multiple Choice

On 1 July 2012,Mawson Ltd acquires all shares in Mountain Ltd for $400 000.The fair value of net assets acquired is $320 000 comprising $200 000 in share capital and $120 000 in retained earnings.On the date of purchase,successful publishing title is not recorded in the books of the acquiree but assumed by the acquirer.The publishing title is estimated at $20 000 and likely to eventuate after acquisition.What is the appropriate elimination entry for this investment that is in accordance with AASB 3 Business Combinations and AASB 10 Consolidated Financial Statements?

A)
$$\begin{array} { | l | l | r | r | } \hline & & ( \$ 000 ) & ( \$ 000 ) \\\hline \mathrm { Dr } & \text { Investment in subsidiary } & 400 & \\\hline \mathrm { Dr } & \text { Gain on bargain purchase } & & 80 \\\hline \mathrm { Dr } & \text { Share capital } & & 200 \\\hline \mathrm { Cr } & \text { Retained earnings } & & 120 \\\hline\end{array}$$
B)
$$\begin{array} { | l | l | r | r | } \hline & & ( \$ 000 ) & ( \$ 000 ) \\\hline \mathrm { Dr } & \text { Investment in subsidiary } & 400 & \\\hline \mathrm { Cr } & \text { Cash } & & 400 \\\hline\end{array}$$
C)
$$\begin{array} { | l | l | r | r | } \hline & & ( \$ 000 ) & ( \$ 000 ) \\\hline \mathrm { Dr } & \text { Share capital } & 200 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 120 & \\\hline \mathrm { Dr } & \text { Goodwill } & 80 & \\\hline \mathrm { Cr } & \text { Investment in subsidiary } & & 400 \\\hline\end{array}$$
D)
$$\begin{array} { | l | l | r | r | } \hline & & ( \$ 000 ) & ( \$ 000 ) \\\hline \text { Dr } & \text { Share capital } & 200 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 120 & \\\hline \mathrm { Dr } & \text { Publishing title } & 20 & \\\hline \mathrm { Dr } & \text { Goodwill } & 60 & \\\hline \mathrm { Cr } & \text { Investment in subsidiary } & & 400 \\\hline\end{array}$$