Use the Following Information to Answer Questions
on 1 $\begin{array} { l l } \text { Share Capital } & \$ 35,000 \\\text { Retained Earnings } & \$ 15,000\end{array}$

question 3

Multiple Choice

Use the following information to answer questions
On 1 July 2008, P Limited acquired all the issued shares of S Limited for $50 000 when the equity of S Limited consisted of:
$\begin{array} { l l } \text { Share Capital } & \$ 35,000 \\\text { Retained Earnings } & \$ 15,000\end{array}$
During the year ended 30 June 2009, S Limited paid an interim dividend of $5 000 from profits earned before 1 July 2008.
-The pre-acquisition elimination entry at 1 July 2008 is:

• A)\(\begin{array} { l l l l }
• \text { Shares in S Limited } & \mathrm { Dr } & 50000 & \\
• \text { Opening Retained earnings } & \mathrm { Cr } & & 15000 \\
• \text { Share capital } & \mathrm { Cr } & & 35000
• \end{array}\)
• B)\(\begin{array} { l l l l }
• \text { Opening Retained earnings } & \mathrm { Dr } & 15000 & \\
• \text { Share capital } & \mathrm { Dr } & 35000 & \\
• \text { Shares in S Limited } & \mathrm { Cr } & & 50000
• \end{array}\)
• C)\(\begin{array} { l l l l }
• \text { Opening Retained earnings } & \mathrm { Dr } & 10000 & \\
• \text { Share capital } & \mathrm { Dr } & 35000 & \\
• \text { Shares in S Limited } & \mathrm { Cr } & & 45000
• \end{array}\)
• D)\(\begin{array} { l l l l }
• \text { Opening Retained earnings } & \mathrm { Dr } & 15,000 & \\
• \text { Share capital } & \mathrm { Dr } & 35,000 & \\
• \text { Dividend paid } & \mathrm { Cr } & 5,000 \\
• \text { Shares in S Limited } & \mathrm { Cr } & 45,000
• \end{array}\)

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Definitions:

Proportions

The relationship between parts of a whole, expressed as fractions, percentages, or ratios.

Capital Market Line

A line used in the capital asset pricing model to illustrate the rates of return for efficient portfolios depending on the risk (measured by standard deviation).

Capital Allocation Line

A graphical representation that shows risk and return of possible portfolios by combining a risk-free asset with a portfolio of risky assets.

Passive Investment Strategy

A strategy in investing that involves minimal buying and selling actions, typically focused on long-term investment in indexes or funds that mirror market performance.