On 1 January 20X0, Ringo Ltd Acquired 100 % of the Share

question 8

Multiple Choice

On 1 January 20X0, Ringo Ltd acquired 100 % of the share capital of George Ltd for $1 000 000 cash.At that date, the equity section of George Ltd's balance sheet was as follows:
\begin{array}{llcc} \text { } &\$ \\ \text {Share capital } &800000\\ \text {Retained profits } &100000\\ \text {Asset revaluation reserve } &100000\\end{array}
Assuming all assets and liabilities were recorded at their fair values what will be the effect of the acquisition on Ringo's account balances in its separate financial statements?

• A)Goodwill will be increased by $200 000
• B)Bargain purchase will be increased by $200 000
• C)Investment in subsidiaries will increase by $800 000
• D)None of the above

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Definitions:

Not Learned

Referring to behaviors, traits, or reactions that are innate rather than acquired or taught.

Share

An individual portion or percentage of ownership in a company or a financial asset, typically traded on a stock exchange.

Second-borns

Individuals born as the second child in their family, potentially influencing their personality and behavior due to birth order dynamics.

Sense Of Dethronement

Feelings of loss or displacement often experienced by a child upon the arrival of a new sibling.