Question
B Company Ltd, a reporting entity, purchases all the issued shares of C Company Pty Ltd for $200,000. The net assets of C Company Pty
B Company Ltd, a reporting entity, purchases all the issued shares of C Company Pty Ltd for $200,000. The net assets of C Company Pty Ltd at the date of acquisition consist of equipment $600,000 and a loan of $400,000 with these values representing their respective fair values.
B Company Ltd will record the acquisition in its separate accounting records as follows:
| a. | Dr. Investment in B Company Pty Ltd $200,000 Cr. Cash $200,000 | |
| b. | Dr. Investment in C Company Pty Ltd $200,000 Cr. Cash $200,000 | |
| c. | Dr. Equipment 600,000 Cr. Loan $400,000 Cr. Cash $200,000 | |
| d. | Dr. Investment in C Company Pty Ltd $200,000 Cr. Issued Capital $200,000 | |
| e. | Dr. Equipment $600,000 Cr. Loan $400,000 Cr. Issued Capital $200,000 |
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Fundamental Accounting Principles
Authors: John Wild, Ken Shaw, Barbara Chiappetta
22nd edition
978-0077862275
