In relation to pre-acquisition of a subsidiary entity, which of the following events can cause a change in the pre-acquisition entry subsequent to acquisition date? I Transfers to post-acquisition retained earnings.
II Depreciation on non-current assets.
III Transfers from pre-acquisition retained earnings.
IV Bonus dividends paid from pre-acquisition equity.
A) I, II, III and IV
B) I, III and IV only
C) II and III only
D) III and IV only

Question

Quizplus · Accepted Answer

The pre-acquisition entry is eliminated on the acquisition date and replaced with the fair value of the subsidiary's net assets. Subsequent events that can cause a change in the pre-acquisition entry include transfers from pre-acquisition retained earnings (III) and bonus dividends paid from pre-acquisition equity (IV).

In Relation to Pre-Acquisition of a Subsidiary Entity, Which of the Following