Assume the Same Data as in Question 4-27

Multiple Choice

Assume the same data as in Question 4-27.In July 20X8,Calpurnia Ltd acquired an additional 20% of the share capital of Portia Ltd and the power to control that company.In preparing the consolidated financial statements of the group controlled by Portia Ltd for the year ended June 30 20X8:

A) An adjustment would be made to recognise the equity of Calpurnia Ltd in the retained earnings at June 30 20X7 of Portia Ltd.
B) No adjustments would be required since the consolidation process would automatically recognise the equity of Calpurnia Ltd in the retained earnings at June 30 20X7 of Portia Ltd.
C) Adjustment would be required to reverse the recognition of the deferred tax liability at June 30 20X7 and the minority interest recognised on that adjustment.
D) None of the above.