In 20x5, P Ltd paid $300 million to acquire 100 of S Ltd when S Ltd's net assets were represented by share capital of $100 million and retained profit of $100 million On this date, S Ltd's land which was carried at cost of $100 million was deemed to have a fair value of $150 million During 20x8, S Ltd sold the land to a third party for $220 million The accounting policy of P Ltd, S Ltd, and the group was to account for land at cost The relevant consolidation adjusting entries for 20x8 consolidated financial statements should be Dr Share capital $100 million Dr Retained profit $150 million Dr Land $50 million Cr Investment $300 million and Dr Goodwill $50 million Cr Land $50 million Dr Share capital $100 million Dr Retained profit $100 million Dr Land $50 million Dr Goodwill $50 million Cr Investment $300 million Dr Share capital $100 million Dr Retained profit $100 million Dr Land $50 million Dr Goodwill $50 million Cr Investment $300 million and Dr Profit on sale of land $50 million Cr Land $50 million None of the listed choices Dr Share capital $100 million Dr Retained profit $150 million Dr Goodwill $50 million Cr Investment $300 million Which option is it

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Posted on Jun 28, 2024

In 20x5, P Ltd paid $300 million to acquire 100% of S Ltd when S Ltd's net assets were represented by share capital of $100

In 20x5, P Ltd paid $300 million to acquire 100% of S Ltd when S Ltd's net assets were represented by share capital of $100 million and retained profit of $100 million. On this date, S Ltd's land which was carried at cost of $100 million was deemed to have a fair value of $150 million. During 20x8, S Ltd sold the land to a third party for $220 million. The accounting policy of P Ltd, S Ltd, and the group was to account for land at cost. The relevant consolidation adjusting entries for 20x8 consolidated financial statements should be:

Dr Share capital $100 million; Dr Retained profit $150 million; Dr Land $50 million; Cr Investment $300 million; and Dr Goodwill $50 million; Cr Land $50 million.
Dr Share capital $100 million; Dr Retained profit $100 million; Dr Land $50 million; Dr Goodwill $50 million; Cr Investment $300 million.
Dr Share capital $100 million; Dr Retained profit $100 million; Dr Land $50 million; Dr Goodwill $50 million; Cr Investment $300 million; and Dr Profit on sale of land $50 million; Cr Land $50 million.
None of the listed choices.
Dr Share capital $100 million; Dr Retained profit $150 million; Dr Goodwill $50 million; Cr Investment $300 million.

Which option is it?