Spock Ltd Acquired a 10 Per Cent Holding in Kirk

Spock Ltd acquired a 10 per cent holding in Kirk Ltd on 1 July 2017 for $350 000 cash,being the fair value of consideration transferred. On 30 June 2018,Spock Ltd acquired a further 75 per cent of the contributed capital of Kirk Ltd for $3 300 000,which represents the fair value of consideration transferred.After the latest acquisition,Spock Ltd gained control of Kirk Ltd.The fair value of the net assets acquired and the liabilities assumed of Kirk Ltd at the acquisition date of 30 June 2018 was $3 500 000 and all assets were recorded at far value in the financial statements of Kirk Ltd.
At that date fair value of the net assets of Kirk Ltd were represented by:
$$\begin{array} { | l | r | } \hline \text { Share capital } & 3000000 \\\hline \text { Retained earnings } & 500000 \\\hline & 3500000 \\\hline\end{array}$$ Goodwill is also attributed to the non-controlling interest.
What is the consolidation entry to eliminate the investment in Kirk Ltd on consolidation for the financial year ended 30 June 2018?

A)
${ \text { Elimination entry: } }\\\begin{array} { | c | l | r | r | } \hline \mathrm { Dr } & \text { Share capital } & 2250000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 375000 & \\\hline \mathrm { Dr } & \text { Goodwill } & 675000 & \\\hline \mathrm { Cr } & \text { Investment in Kirk Ltd } & & 3300000 \\\hline\end{array}$
B)
${ \text { Elimination entry: } }\\\begin{array} { | c | l | r | r | } \hline \mathrm { Dr } & \text { Share capital } & 2550000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 425000 & \\\hline \mathrm { Dr } & \text { Goodwill } & 765000 & \\\hline \mathrm { Cr } & \text { Investment in Kirk Ltd } & & 3740000 \\\hline\end{array}$
C)
${ \text { Elimination entry: } }\\\begin{array} { | c | l | r | r | } \hline \mathrm { Dr } & \text { Share capital } & 2550000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 425000 & \\\hline \mathrm { Dr } & \text { Goodwill } & 675000 & \\\hline \mathrm { Cr } & \text { Investment in Kirk Ltd } & & 3650000 \\\hline\end{array}$
D)
${ \text { Elimination entry: } }\\\begin{array} { | r | l | r | r | } \hline \mathrm { Dr } & \text { Share capital } & 2250000 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 375000 & \\\hline \mathrm { Dr } & \text { Goodwill } & 1200000 & \\\hline \mathrm { Cr } & \text { Non-controlling interest } & & 525000 \\\hline \mathrm { Cr } & \text { Investment in Kirk Ltd } & & 3300000 \\\hline\end{array}$

Correct Answer:

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