Question $7$

Cloudscape Ltd acquired a group of assets including the account receivable and assumed liabilities as a business from QuantaLeap Ltd$.$ On the acquisition date, the fair value of the acquired account receivable was $$6,000.$ Based on the information given below, how much of the doubtful debt allowance should be adjusted by Cloudscape Ltd$?$

Account receivable $10,000$

QuantaLeap Ltd $\text{'}$s accounting book

Allowance of doubtful debt

$3,000$

A$.$ Dr$.$ Allowance of doubtful debt $$3,000$

B$.$ Cr$.$ Allowance of doubtful debt $$3,000$

C$.$ Dr$.$ Allowance of doubtful $$4,000$

D$.$ Cr$.$ Allowance of doubtful debt $$4,000$