Parent Limited Acquired 100% of a Subsidiary on 1 July

question 8

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)DR Share capital $14 000 CR Bonus dividend paid $14 000
• B)DR Shares in subsidiary 14 000 CR Share capital $14 000
• C)DR Bonus dividend paid $14 000 CR Retained earnings $14 000
• D)DR Retained earnings $14 000 CR Share capital $14 000.

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Definitions:

Monetary Policy

A strategy implemented by a country's central bank to control the money supply, often targeting inflation or interest rates to promote economic stability and growth.

Phillips Curve Relationship

This relationship indicates an inverse correlation between unemployment rates and inflation, suggesting that lower unemployment leads to higher inflation and vice versa.

Economists

Professionals who study the production, distribution, and consumption of goods and services, often analyzing economic issues and trends.

Trade-offs

The evaluation and choice between competing alternatives in situations where having one benefit often means giving up another.