Magic Ltd Acquired 4 Million of the Issued Shares of Man

Multiple Choice

Magic Ltd acquired 4 million of the issued shares of Man Ltd on 1 November 20X0 when the equity of Man Ltd (at fair value) was as follows:
$\begin{array}{llcc} \text { } & \$000s \\ \text { Paid up capital (5 million shares) } &4000\\ \text { Retained profits} &500\\ \text { Asset revaluation reserve } &500\\\end{array}$

Magic Ltd paid $6 million for this acquisition. On 31 October 20X1 Magic Ltd sold 500 000 of these shares at an average price of $2.10 per share. What was the net result on period profit or loss of Magic Ltd resulting from the sale of these shares?

A) $550 000 loss
B) $550 000 profit
C) $300 000 loss
D) $300 000 profit