On 1 January 20X2 A Ltd acquired all the issued shares in B Ltd.At that date the inventory of B Ltd had a carrying amount of $5 000 less than its fair value.The inventory was all sold by 30 June 20X4.At 30 June 20X5 the consolidation adjustment against inventory in relation to the transaction will be:
A)a debit of $5 000
B)a credit of $5 000
C)a debit of $3 500
D)nothing

Question

Quizplus · Accepted Answer

The inventory was sold by 30 June 20X4, so by 30 June 20X5, there is no remaining inventory related to the acquisition that requires a consolidation adjustment.

On 1 January 20X2 a Ltd Acquired All the Issued