Use the following information to answer questions
On 1 July 2008, P Limited acquired all the issued shares of S Limited for $50 000 when the equity of S Limited consisted of:

\begin{array} { l l } \text { Share Capital } & \$ 35,000 \\\text { Retained Earnings } & \$ 15,000\end{array}

During the year ended 30 June 2009, S Limited paid an interim dividend of $5 000 from profits earned before 1 July 2008.
-The pre-acquisition elimination entry at 30 June 2009 is:
A)

\begin{array} { c l l l } \text { Opening Retained earnings } & \mathrm { Dr } & 10,000 & \\\text { Share capital } & \mathrm { Dr } & 35,000 & \\\text { Shares in S Limited } & \mathrm { Cr } & 45,000\end{array}

\begin{array} { l l l l } \text { Opening Retained earnings } & \mathrm { Dr } & 15,000 & \\\text { Share capital } & \mathrm { Dr } & 35,000 & \\\text { Shares in S Limited } & \mathrm { Cr } & 50,000\end{array}

\begin{array} { l l r l } \text { Opening Retained earnings } & \mathrm { Dr } & 10,000 & \\\text { Share capital } & \mathrm { Dr } & 35,000 & \\\text { Dividends payable } & \mathrm { Dr } & 5,000 & \\\quad \text { Shares in S Limited } & \mathrm { Cr } & 50,000\end{array}

\begin{array} { l l l l } \text { Opening Retained earnings } & \mathrm { Dr } & 15,000 & \\\text { Share capital } & \mathrm { Dr } & 35,000 & \\\text { Shares in S Limited } & \mathrm { Cr } & & 45,000 \\\text { Dividends paid } & \mathrm { Cr } & & 5,000\end{array}

Company X Acquired Company Y When the Carrying Value of Company

Multiple Choice

Correct Answer:VerifiedUnlock this answer nowGet Access to more Verified Answers free of chargeAccess For Free

Correct Answer:
Verified
Unlock this answer now
Get Access to more Verified Answers free of charge