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On 1 July 2012,Carol Ltd Acquires All Shares in Alice

Question 51

Multiple Choice

On 1 July 2012,Carol Ltd acquires all shares in Alice Ltd for $400 000.The fair value of net assets acquired is $320 000 comprised of $200,000 in share capital and $120 000 in retained earnings.On the date of purchase,a contingent liability is not recoded in the books of the acquiree but assumed by the acquirer.The contingent liability 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 127 "Consolidated and Separate Financial Statements"?


A) On 1 July 2012,Carol Ltd acquires all shares in Alice Ltd for $400 000.The fair value of net assets acquired is $320 000 comprised of $200,000 in share capital and $120 000 in retained earnings.On the date of purchase,a contingent liability is not recoded in the books of the acquiree but assumed by the acquirer.The contingent liability 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 127 Consolidated and Separate Financial Statements ? A) B) C) D) E) None of the given answers.
B) On 1 July 2012,Carol Ltd acquires all shares in Alice Ltd for $400 000.The fair value of net assets acquired is $320 000 comprised of $200,000 in share capital and $120 000 in retained earnings.On the date of purchase,a contingent liability is not recoded in the books of the acquiree but assumed by the acquirer.The contingent liability 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 127 Consolidated and Separate Financial Statements ? A) B) C) D) E) None of the given answers.
C) On 1 July 2012,Carol Ltd acquires all shares in Alice Ltd for $400 000.The fair value of net assets acquired is $320 000 comprised of $200,000 in share capital and $120 000 in retained earnings.On the date of purchase,a contingent liability is not recoded in the books of the acquiree but assumed by the acquirer.The contingent liability 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 127 Consolidated and Separate Financial Statements ? A) B) C) D) E) None of the given answers.
D) On 1 July 2012,Carol Ltd acquires all shares in Alice Ltd for $400 000.The fair value of net assets acquired is $320 000 comprised of $200,000 in share capital and $120 000 in retained earnings.On the date of purchase,a contingent liability is not recoded in the books of the acquiree but assumed by the acquirer.The contingent liability 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 127 Consolidated and Separate Financial Statements ? A) B) C) D) E) None of the given answers.
E) None of the given answers.

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