Parent Limited Acquired 100% of a Subsidiary on 1 July $\text { DR } \quad \text { Share capital } \quad \$ 14000$

question 11

Multiple Choice

Parent Limited acquired 100% of a subsidiary on 1 July 20X7. At acquisition date the subsidiary had the following equity items:
? Retained earnings $24 000
? Share capital $33 000
? Business combination revaluation reserve $10 000
In the year following the acquisition the subsidiary paid a bonus dividend of $14 000 out of pre-acquisition retained earnings. The following consolidation adjustment is needed in the consolidation worksheet for 30 June 20X8:

• A) \(\text { DR } \quad \text { Share capital } \quad \$ 14000\)
• \(\begin{array}{lll}
• \text { CR } & \text { Bonus dividend paid } & \$ 14000
• \end{array}\)
• B) \(\begin{array} { l r r r r }
• \text { DR } & & \text { Shares in subsidiary } & 14000 & \\
• & \text { CR } & \text { Share capital } & & \$ 14000
• \end{array}\)
• C) \(\begin{array} { l c c c c }
• \text { DR } & & \text { Bonus dividend paid } & \$ 14000 & \\
• & \text { CR } & \text { Retained earnings } & & \$ 14000
• \end{array}\)
• D) \(\begin{array} { l r r r }
• \text { DR } & \text { Retained earnings } & \$ 14000 & \\
• \text { CR } & \text { Share capital } & \$ 14000
• \end{array}\)

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