Rose Ltd Acquired All the Equity of Jeannie Ltd on 1

Multiple Choice

Rose Ltd acquired all the equity of Jeannie Ltd on 1 July 20X3.At that time the fair value/financial position of Jeannie was as follows:
$$\begin{array} { l r } \text { Capital } & \$ 500000 \\\text { Reserves } & \$ 100000 \\\text { Retained profits } & \$ 150000 \\\text { Liabilities } & \$ 50000\end{array}$$
Rose paid $850 000 for the shares in Jeannie.
In the 20X3-4 financial year, Jeannie made $75 000 in profits and recorded a goodwill impairment of $10 000.
Which of the following is the correct set of consolidation entries for June 30 20X4?

A) $\begin{array} { l r r } \text { Dr. Capital } & \$ 500000 & \\ \text { Dr. Reserves } & 100000 & \\ \text { Dr. Retained profits } & 150000 & \\ \text { Dr. Goodwill } & 100000 & \\ \text { Cr. Investment } & & \$ 850000 \end{array}$
Dr Impairment expense
- Goodwill $\quad \$ 10000$
Cr. Accumulated goodwill impairment $\quad \$ 10000$
B) $\begin{array} { l r r } \text { Dr. Capital } & \$ 500000 & \\ \text { Dr. Reserves } & 100000 & \\ \text { Dr. Retained profits } & 225000 & \\ \text { Dr. Goodwill } & 25000 & \\ \text { Cr. Investment } & & \$ 850000 \end{array}$
Dr Impairment expense
- Goodwill $\quad \$ 10000$
$\begin{array} { l l } \text { Cr. Accumulated goodwill impairment } & \$ 10000 \end{array}$
C) $\begin{array} { l r r } \text { Dr. Capital } & \$ 500000 & \\\text { Dr. Reserves } & 100000 & \\\text { Dr. Retained profits } & 140000 & \\\text { Dr. Goodwill } & 110000 & \\\text { Cr. Investment } & & \$ 850000\end{array}$
D)
$\begin{array} { l r r } \text { Dr. Capital } & \$ 500000 & \\\text { Dr. Reserves } & 100000 & \\\text { Dr. Retained profits } & 150000 & \\\text { Dr. Goodwill } & 90000 & \\\text { Cr. Investment } & & \$ 840000\end{array}$