On 1 July 2012, Carol Ltd acquires all shares in Alice Ltd for $400 000. The fair value of net assets acquired is $320 000 comprised of $200,000 in share capital and $120 000 in retained earnings. On the date of purchase, a contingent liability is not recoded in the books of the acquiree but assumed by the acquirer. The contingent liability is estimated at $20 000 and likely to eventuate after acquisition. What is the appropriate elimination entry for this investment that is in accordance with AASB 3 "Business Combinations" and AASB 127 "Consolidated and Separate Financial Statements"?
E) None of the given answers.

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The Answer of On 1 July 2012, Carol Ltd acquires all shares in Alice Ltd for $400 000. The fair value of net assets acquired is $320 000 comprised of $200,000 in share capital and $120 000 in retained earnings. On the date of purchase, a contingent liability is not recoded in the books of the acquiree but assumed by the acquirer. The contingent liability is estimated at $20 000 and likely to eventuate after acquisition. What is the appropriate elimination entry for this investment that is in accordance with AASB 3 "Business Combinations" and AASB 127 "Consolidated and Separate Financial Statements"?
E) None of the given answers.

On 1 July 2012, Carol Ltd Acquires All Shares in Alice