Reference no: EM132864983

Question 1: On the 1 July 2013, Alma Ltd purchased 30% of the shares of Arsenal Ltd for $ 120000, at this date the equity of Arsenal Ltd consisted of 180000 share capital and 10000 retained earnings. At this date, all identifiable assets and liabilities of Arsenal Ltd were recorded at fair value except for inventory which its fair value 50000 and carrying value 40000. And plant that its fair value 100000 and carrying value 80000. If the useful life of plant 4 years and all inventory was sold before 30/6/2014 and tax rate was 30%., the pre-acquisition of current year are as follows:

Select one:

a. Cost of goods sold (7000) and depreciation of plant (14000)
b. Cost of goods sold (7000) and depreciation of plant (3500)
c. Cost of goods sold (10000) and depreciation of plant (20000)
d. Cost of goods sold (10000) and depreciation of plant (5000)