Which of the Following Statements Accurately Describes the Elimination Entry

question 34

Multiple Choice

Which of the following statements accurately describes the elimination entry to eliminate pre-acquisition shareholders' funds?

• A) It is made once at the time of the first consolidation of the economic entity's accounts in order to eliminate the parent entity's investment in the subsidiary against the non-monetary assets of the controlled entity.
• B) It is made each time the consolidation is performed in order to adjust the carrying value of the controlled entity's non-current assets to their fair value.
• C) It is carried out once at the date that control of the subsidiary is achieved in order to create the goodwill or discount and eliminate the parent entity's equity against the controlled entity's investment.
• D) It is made each time the consolidation is performed in order to eliminate the parent entity's investment in the controlled entity against the equity of the controlled entity. Any adjustments necessary to bring the non-current assets of the controlled entity to fair value are made before the elimination entry and any difference between the consideration paid and the fair value of the net assets of the controlled entity are recognised.
• E) None of the given answers.

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Definitions:

Extensive

Describes something that covers a large area or has a wide scope or range.

Limited

something confined within boundaries, restricted in size, amount, or extent.

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