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:

Emotional Arousal

Pertains to the condition of being emotionally stimulated or excited, which can impact individuals' decision-making processes and behaviors.

Self-efficacy Theory

posits that individuals' belief in their ability to perform tasks influences their motivation and performance, underlining the importance of self-confidence in achieving success.

Capable

Having the ability, fitness, or quality necessary to do or achieve a specified thing.

Motivated

Refers to the drive, desire, or willingness of an individual to take action or achieve a certain goal.