On 1 January 20X0, Ringo Ltd acquired 100 % of the share capital of George Ltd for $1 000 000 cash.At that date, the equity section of George Ltd's balance sheet was as follows:
$\begin{array}{llcc}
\text { } &\$ \
\text {Share capital } &800000\
\text {Retained profits } &100000\
\text {
Asset revaluation reserve } &100000\
\end{array}$
Assuming all assets and liabilities were recorded at their fair values what will be the effect of the acquisition on Ringo's account balances in its separate financial statements?
A)Goodwill will be increased by $200 000
B)Bargain purchase will be increased by $200 000
C)Investment in subsidiaries will increase by $800 000
D)None of the above

Question

On 1 January 20X0, Ringo Ltd acquired 100 % of the share capital of George Ltd for $1 000 000 cash.At that date, the equity section of George Ltd's balance sheet was as follows:
$\begin{array}{llcc}
  \text {  } &\$  \
 \text {Share capital  } &800000\
 \text {Retained profits  } &100000\
 \text {
Asset revaluation reserve  } &100000\
\end{array}$
Assuming all assets and liabilities were recorded at their fair values what will be the effect of the acquisition on Ringo's account balances in its separate financial statements?
A)Goodwill will be increased by $200 000
B)Bargain purchase will be increased by $200 000
C)Investment in subsidiaries will increase by $800 000
D)None of the above

Quizplus · Accepted Answer

The Answer of On 1 January 20X0, Ringo Ltd acquired 100 % of the share capital of George Ltd for $1 000 000 cash.At that date, the equity section of George Ltd's balance sheet was as follows:
$\begin{array}{llcc}
  \text {  } &\$  \
 \text {Share capital  } &800000\
 \text {Retained profits  } &100000\
 \text {
Asset revaluation reserve  } &100000\
\end{array}$
Assuming all assets and liabilities were recorded at their fair values what will be the effect of the acquisition on Ringo's account balances in its separate financial statements?
A)Goodwill will be increased by $200 000
B)Bargain purchase will be increased by $200 000
C)Investment in subsidiaries will increase by $800 000
D)None of the above

On 1 January 20X0, Ringo Ltd Acquired 100 % of the Share