Rose Ltd Acquired All the Equity of Jeannie Ltd on 1

question 22

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:
$$\begin{array} { l r } \text { Capital } & \$ 500000 \\\text { Reserves } & \$ 100000 \\\text { Retained profits } & \$ 150000 \\\text { Liabilities } & \$ 50000\end{array}$$
Suppose that Rose paid $500 000 for the shares in Jeanie, which of the following correctly describes the accounting procedures that will arise as a result of the business combination?

• A)The Rose Group will record a goodwill asset of $250 000 on its consolidation worksheet if prepared as at 1 July 20X3
• B)Rose Ltd will record an impairment expense of $250 000 in its ledger
• C)The Rose Group will record a bargain purchase revenue of $250 000 on its consolidation worksheet if prepared as at 1 July 20X3
• D)None of the above are appropriate

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Definitions:

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The monthly shedding of the uterine lining in women and female mammals, usually accompanied by bleeding.

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A medical instrument used to examine the abdominal cavity or perform minimally invasive surgery.

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Paired tubes that transport eggs from the ovaries to the uterus, essential for fertilization.

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The first form of milk produced by mammalian mothers shortly after giving birth, rich in antibodies.