Solution-Determine the pre-acquisition entry on acquisition

Determine the pre-acquisition entry on acquisition date

Reference no: EM132618162

Question - Kollektiv Limited purchased 100% of the shares in Dramaphone Limited on 1 July 2020, for a cash consideration of $ 1,200,000. On that date, the equity balances of Dramaphone Limited were:

Share Capital $1,000,000

Retained Earnings $300,000

All of the identifiable net assets were recorded at their fair value in the books of Dramaphone Limited. The tax rate is 30%. Determine the pre-acquisition entry on acquisition date?

a. Dr Retained Earnings $ 100,000

b. Cr Gain on Bargain Purchase $ 100,000

c. Dr Goodwill $ 100,000

d. Dr BCVR $ 70,000

e. None of the other options.

Reference no: EM132618162

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Determine the pre-acquisition entry on acquisition date

Reference no: EM132618162

Reference no: EM132618162

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