The effect of the pre-acquisition entry is to eliminate the 'Shares in subsidiary' asset and the:
A) equity of the subsidiary at the acquisition date.
B) equity of the parent at the acquisition date.
C) net assets of the subsidiary at the acquisition date.
D) net assets of the parent at the acquisition date.

Question

Quizplus · Accepted Answer

The pre-acquisition entry eliminates the 'Shares in subsidiary' asset and the equity of the subsidiary at the acquisition date to avoid double counting in consolidated financial statements.

The Effect of the Pre-Acquisition Entry Is to Eliminate the 'Shares