Question
On 1 July 2021, C Ltd purchased 90% of the share capital of D Ltd for $150 000. At that date, shareholders equity of D
On 1 July 2021, C Ltd purchased 90% of the share capital of D Ltd for $150 000. At that date, shareholders equity of D Ltd was: $ Share capital 90 000 General reserve 30 000 Retained earnings 10 000 The abridged statement of comprehensive income of both companies for the year ended 30 June 2023 were as follows: C Ltd D Ltd $ $ Retained earnings 1 July 2022 14 000 10 000 Operating profit 18 000 16 000 32 000 26 000 Interim dividend paid 14 000 8 000 Proposed dividend 7 000 4 500 21 000 12 500 Retained earnings 30 June 2023 11 000 13 500 Additional information a) The closing inventory of C Ltd included goods of $5 000 bought from D Ltd. This inventory originally cost D Ltd $4 000. b) C Ltd included in its final accounts the dividends provided by D Ltd. c) All dividends are from post-acquisition profit. d) The directors have applied the impairment test for goodwill and determined that a write-down of $3 300 is required for consolidation purposes as at 30 June 2023
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