Lillee Ltd Acquired 60% of the Issued Share Capital of Thompson

Multiple Choice

Lillee Ltd acquired 60% of the issued share capital of Thompson Ltd on 1 February 20X1.Thompson Ltd's shareholders equity (all at fair value) at that date was as follows:
$\begin{array}{llcc}&000s \\ \text { Paid up capital } &\$4000\\ \text { Retained profits } &\$1000\\ \text { Asset revaluation reserve } &\$2000\\ \text { } &\\ \text { } &\\\end{array}$

If Lillee Ltd paid $8 000 000 for this acquisition what is the elimination entry if consolidated financial statements were prepared on 2 February 20X1? Use the partial method.

A) $\begin{array}{lrr}\text { Accounts } & \text { Debit } \$ \mathbf{0 0 0} & \text { Credit } \$ 000 \\\text { Paid up capital } & 2400 & \\\text { Retained profits } & 600 &\end{array}$

B) $\begin{array} { l r r } \text { Accounts } & \text { Debit } \$ \mathbf { 0 0 0 } & \text { Credit } \$ \mathbf { 0 0 0 } \\\text { Paid up capital } & 4000 & \\\text { Retained profits } & 1000 & \\\text { Asset revaluation reserve } & 2000 & \\\text { Goodwill } & 1000 & \\\text { Investment in Thompson Ltd } & & 8000\end{array}$
C) $\begin{array} { l r r } \text { Accounts } & \text { Debit } \$ \mathbf { 0 0 0 } & \text { Credit } \$ \mathbf { 0 0 0 } \\\text { Paid up capital } & 4000 & \\\text { Retained profits } & 1000 & \\\text { Asset revaluation reserve } & 2000 & \\\text { Investment in Thompson Ltd } & & 7000\end{array}$
D) $\begin{array} { l r r } \text { Accounts } & \text { Debit } \$ \mathbf { 0 0 0 } & \text { Credit } \$ \mathbf { 0 0 0 } \\\text { Paid up capital } & 24000 & \\\text { Retained profits } & 600& \\\text { Asset revaluation reserve } & 1200 & \\\text { Investment in Thompson Ltd } & & 7000\end{array}$