Question

ee-Ann Ltd acquired all the voting shares in Pamela Ltd. At the time of the takeover the following amounts are relevant: Recorded by Pamela $ Comments Accounts receivable 30 000 Uncollectible debts allowance is thought to be $10 000 more favourable than estimated. Vehicles 120 000 Straight line depreciation is used and preferred by Pamela. Group depreciation policy is for reducing balance. However, no other group member has vehicles of this specialist kind and straight-line is thought to be a reasonable method to obtain fair value for these. Vehicles have ten-year life and were purchased at control date. When preparing the consolidated worksheet for the Lee-Ann-Pamela group, what would be the most appropriate consolidation adjustment journals at the time of the subsidiary’s acquisition: Select one: A. No entries required . B. Accounts Debit $ Credit $ Vehicles 12 000 Fair value reserve 12 000 . C. Accounts Debit $ Credit $ Vehicles 12 000 Fair value reserve 12 000 Estimated uncollectible debts 10 000 Bad debts expense 10 000 . D. Accounts Debit $ Credit $ Estimated uncollectible debts 10 000 Bad debts expense 10 000 .

Answer 1