On 1 July 2012,Goliath Ltd acquires all shares in David Ltd for $800 000.The fair value of net assets acquired is $920 000 comprised of $600 000 in share capital and $320 000 in retained earnings.What is the appropriate elimination entry for this investment that is in accordance with AASB 3 Business Combinations and AASB 10 Consolidated Financial Statements?
A)

\begin{array} { | l | l | r | r | } \hline & & ( \$ 000 ) & ( \$ 000 ) \\\hline \mathrm { Dr } & \text { Investment in subsidiary } & 800 & \\\hline \mathrm { Dr } & \text { Goodwill } & 120 & \\\hline \mathrm { Cr } & \text { Share capital } & & 600 \\\hline \mathrm { Cr } & \text { Retained earnings } & & 320 \\\hline\end{array}

\begin{array} { | l | l | r | r | } \hline & & ( \$ 000 ) & ( \$ 000 ) \\\hline \mathrm { Dr } & \text { Investment in subsidiary } & 800 & \\\hline \mathrm { Dr } & \text { Gain on bargain purchase } & 120 & \\\hline \mathrm { Cr } & \text { Share capital } & & 600 \\\hline \mathrm { Cr } & \text { Retained earnings } & & 320 \\\hline\end{array}

\begin{array} { | l | l | r | r | } \hline & & ( \$ 000 ) & ( \$ 000 ) \\\hline \mathrm { Dr } & \text { Share capital } & 600 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 320 & \\\hline \mathrm { Cr } & \text { Gain on bargain purchase } & & 120 \\\hline \mathrm { Cr } & \text { Investment in subsidiary } & & 800 \\\hline\end{array}

\begin{array} { | l | l | r | r | } \hline & & ( \$ 000 ) & ( \$ 000 ) \\\hline \mathrm { Dr } & \text { Share capital } & 600 & \\\hline \mathrm { Dr } & \text { Retained earnings } & 320 & \\\hline \mathrm { Cr } & \text { Goodwill } & & 120 \\\hline \mathrm { Cr } & \text { Investment in subsidiary } & & 800 \\\hline\end{array}

Goodwill Is

Multiple Choice

Correct Answer:VerifiedUnlock this answer nowGet Access to more Verified Answers free of chargeAccess For Free

Correct Answer:
Verified
Unlock this answer now
Get Access to more Verified Answers free of charge