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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