Reference no: EM132618058

Problem 1: On 1 July 2024, Pineapple Limited acquired all the issued shares of Melon Limited for $250,000, when the equity of Melon 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 Melon Ltd, except for inventory which had, at acquisition date, a carrying amount of 50,000 and a fair value of 57,000. The tax rate is 30%. The pre-acquisition entry at 1 July 2024 for Pineapple Limited is:

Select one:

Option a. Dr Retained Earnings $ 150,000 Dr Share Capital $ 60,000 Dr BCVR $ 40,000 Cr Investment in Melon $ 250,000

Option b. Dr Retained Earnings $ 150,000 Dr Share Capital $ 60,000 Dr BCVR $ 4,700 Dr Goodwill $ 35,100 Cr Investment in Melon $ 250,000

Option c. Dr Retained Earnings $ 60,000 Dr Share Capital $ 150,000 Dr BCVR $ 40,000 Cr Investment in Melon $ 250,000

Option d. Dr Retained Earnings $ 150,000 Dr Share Capital $ 60,000 Dr Inventory $ 4,700 Dr Goodwill $ 35,100 Cr Investment in Melon $ 250,000

Option e. Dr Retained Earnings $ 150,000 Dr Share Capital $ 60,000 Dr Inventory $ 7,000 Dr Goodwill $ 33,000 Cr Investment in Melon $ 250,000