The substitution elimination entry is necessary to:

a.

record the 'Investment in subsidiary' account in the parent's records.

b.

avoid overstating the equity and net assets of the group.

c.

avoid understating the equity and net assets of the group.

d.

avoid overstating the equity and net assets of the parent.

On 1 March 2017, Ann Ltd acquired all the assets and liabilities of Jill Ltd. In exchange for these assets and liabilities, Ann Ltd issued 20,000 shares and the fair value of each share at acquisition date was $2.80. Costs of issuing these 20,000 shares amounted to $5,000. Which of the following lines is correct for Ann Ltd to account for the costs of issuing the shares?

a.

Dr Cash $5,000

b.

Cr Share capital $5,000

c.

Dr Acquisition-related expense $5,000

d.

Dr Share capital $5,000

Harrison Ltd purchased all the shares of Minto Ltd on 1 Jan 20X3 for $290,000. On that date, Minto Ltd's equities had share capital of $200,000 and retained profits of $35,000. On the control date, the fair value of Minto Ltd's net assets was $40,000 higher than their carrying amount. How much consolidation goodwill/bargain purchase gain should be reported in the consolidated financial statements?

a.

$55,000 consolidation goodwill

b.

$15,000 consolidation goodwill

c.

$15,000 consolidation bargain purchase gain

d.

$55,000 consolidation bargain purchase gain

Unite Ltd provided a loan of $1,000,000 to its subsidiary Inspire Ltd. Interest of $100,000 was charged during the year ended 30 June 2020. On consolidation, which of the following elimination entries is needed at 30 June 2020 in relation to the interest charged?

a.

DrInterest revenue$100000

CrInterest expense$100000

b.

DrInterest expense$100000

CrInterest revenue$100000

c.

DrInterest expense$100000

CrCash$100000

d.

No elimination is needed