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

question 30

Multiple Choice

On 1 January 20X0, Linda Ltd acquired 100 % of the share capital of Yoko Ltd for $900 000 cash.At that date, the equity section of Yoko Ltd's balance sheet was as follows:
\begin{array}{llcc} \text { } &\$ \\ \text {Share capital } &900000\\ \text {Retained profits } &400000\\ \text {Asset revaluation reserve } &300000\\end{array}
Assuming all assets and liabilities were recorded at their fair values what will be the effect of the acquisition on the financial statements?

• A)Goodwill will be increased by $700 000 in Linda's separate statements
• B)Bargain purchase will be increased by $700 000 in the Linda Group consolidated statements
• C)Bargain purchase will be increased by $700 000 in the Linda separate statements
• D)Goodwill will be increased by $400 000 in Yoko's separate statements

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Definitions:

Marxist Economy

An economic system based on the socio-economic theories of Karl Marx, focusing on the role of labor in the development of an economy and the concept of class struggle.

Planned Economy

An economic system where the government controls and regulates production, distribution, and prices.

Laissez-Faire Economy

an economic system with minimal government intervention, where transactions are dictated by private parties.

Central Direction

The control of economic or organizational activity by a central authority or government.