Angels Ltd Acquired 100% of ACDC Ltd on 1 July

Multiple Choice

Angels Ltd acquired 100% of ACDC Ltd on 1 July 20X0 for $2 000 000, when the equity of ACDC Ltd comprised paid up capital of $1 400 000 and retained profits of $300 000.All ACDC Ltd's balance sheet was reported at fair value at acquisition date.During the year ended 30 June 20X1 ACDC Ltd declared and paid a total dividend of $100 000 out of pre-acquisition profits.What is the elimination entry for these transactions for the year ended 30 June 20X1? Assume AASB 127.38A was not operational during this period.

A) $\begin{array}{lrr}\text { Accounts } & \text { Debit \$ } & \text { Credit \$ } \\\text { Goodwill } & 300000 & \\\text { Paid up capital } & 1400000 & \\\text { Retained profits } & 300000 & \\\text { Investment in ACDC Ltd } & & 2000000\end{array}$

B) $\begin{array}{lrr}\text { Accounts } & \text { Debit \$ } & \text { Credit \$ } \\\text { Goodwill } & 300000 & \\\text { Paid up capital } & 1400000 & \\\text { Retained profits } & 200000 & \\\text { Investment in ACDC Ltd } & & 1900000\end{array}$

C) $\begin{array}{lrr}\text { Accounts } & \text { Debit \$ } & \text { Credit \$ } \\\text { Goodwill } & 200000 & \\\text { Paid up capital } & 1400000 & \\\text { Retained profits } & 300000 & \\\text { Investment in ACDC Ltd } & & 1900000\end{array}$


D) $\begin{array} { l r c } \text { Accounts } & \text { Debit } \$ & \text { Credit \$ } \\\text { Goodwill } & 300000 & \\\text { Paid up capital } & 400000 \\\text { Retained profits } & 100000 & \\\text { Dividend revenue } & 200000 & \\\text { Investment in ACDC Ltd } & & 2000000\end{array}$