Willow Ltd acquired 100% of Tree Ltd on 1 July 2020. At acquisition date, Tree Ltd had the following equity items: Retained earnings $52,000 Share capital 70,000 General Reserve 25,000 In the year following the acquisition, Tree Ltd paid a bonus share dividend of $22,000 out of pre-acquisition retained earnings. The following consolidation adjustment is needed in the consolidation worksheet for 30 June 2021: a. DR Shares in subsidiary $22,000 CR Share capital $22,000 b. DR Retained earnings $22,000 CR Share capital $22,000 c. DR Share capital $22,000 CR Bonus dividend paid $22,000 d. DR Bonus dividend paid $22,000 CR Share capital $22,000
Willow Ltd acquired 100% of Tree Ltd on 1 July 2020. At acquisition date, Tree Ltd had the following equity items: Retained earnings $52,000 Share capital 70,000 General Reserve 25,000 In the year following the acquisition, Tree Ltd paid a bonus share dividend of $22,000 out of pre-acquisition retained earnings. The following consolidation adjustment is needed in the consolidation worksheet for 30 June 2021: a. DR Shares in subsidiary $22,000 CR Share capital $22,000 b. DR Retained earnings $22,000 CR Share capital $22,000 c. DR Share capital $22,000 CR Bonus dividend paid $22,000 d. DR Bonus dividend paid $22,000 CR Share capital $22,000
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 38P
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Willow Ltd acquired 100% of Tree Ltd on 1 July 2020. At acquisition date, Tree Ltd had the following equity items:
|
$52,000 |
Share capital |
70,000 |
General Reserve |
25,000 |
In the year following the acquisition, Tree Ltd paid a bonus share dividend of $22,000 out of pre-acquisition retained earnings. The following consolidation adjustment is needed in the consolidation worksheet for 30 June 2021:
a. DR Shares in subsidiary $22,000 |
||
b. DR Retained earnings $22,000 |
||
c. DR Share capital $22,000 |
||
d. DR Bonus dividend paid $22,000 |
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