Reference no: EM132618158
Question - On 1 July 2023, Apple Limited acquired all the issued shares of Pear Limited for $270,000, when the equity of Pear Limited consisted of:
Share Capital $60,000
Retained Earnings $150,000
All of the identifiable net assets were recorded at their fair value in the books of Pear Limited, except for inventory which had, at acquisition date, a carrying amount of 49,000 and a fair value of 57,000.
The tax rate is 30%.
Find the pre-acquisition entry at 1 July 2023 for Apple Limited is:
a. Dr Retained Earnings $ 150,000
Dr Share Capital $ 60,000
Dr BCVR $ 60,000
Cr Investment in Pear $ 270,000
b. Dr Retained Earnings $ 150,000
Dr Share Capital $ 60,000
Dr BCVR $ 5,600
Dr Goodwill $ 54,400
Cr Investment in Pear $ 270,000
c. Dr Retained Earnings $ 60,000
Dr Share Capital $ 150,000
Dr BCVR $ 60,000
Cr Investment in Pear $ 270,000
d. Dr Retained Earnings $ 150,000
Dr Share Capital $ 60,000
Dr Inventory $ 5,600
Dr Goodwill $ 54,400
Cr Investment in Pear $ 270,000
e. Dr Retained Earnings $ 150,000
Dr Share Capital $ 60,000
Dr Inventory $ 8,000
Dr Goodwill $ 52,000
Cr Investment in Pear $ 270,000