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Phantom Co acquired 70% of the $100,000 equity share capital of Ghost Co, its only subsidiary, for $200,000 on 1 January 20X9 when the retained earnings of Ghost Co were $156,000.At 31 December 20X9 retained earnings are as follows: $ Phantom Co 275,000 Ghost Co 177,000 Phantom Co considers that goodwill on acquisition is impaired by 50%. Non-controlling interest is measured at fair value, estimated at $82,800.Using the drop down box, select what are group retained earnings at 31 December 20X9?

A. $262,900
B. $280,320
C. $289,700
D. $585,700

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Tazer Co, a parent company, acquired Lowdown Co, an unincorporated entity, for $2.8 million. A fair value exercise performed on Lowdown Co's net assets at the date of purchase showed: $'000 Property, plant and equipment 3,000 Identifiable intangible asset 500 Inventories 300 Trade receivables less payables 200 4,000 How should the purchase of Lowdown be reflected in Tazer Co's consolidated statement of financial position?

A. Record the net assets at their values shown above and credit profit or loss with $1.2 million
B. Record the net assets at their values shown above and credit Tazer Co's consolidated goodwill with $1.2 million
C. Write off the intangible asset ($500,000), record the remaining net assets at their values shown above and credit profit or loss with $700,000
D. Record the purchase as a financial asset investment at $2.8 million

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Overstatement of profits can arise during periods of inflation. This then leads to a number of other consequences. Which of the following is NOT a likely consequence of overstatement of profits?

A. Higher wage demands from employees
B. Higher tax bills
C. Reduced dividends to shareholders
D. Overstated EPS

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The 'physical capital maintenance' concept states that profit is the increase in the physical productive capacity of the business over the period. This concept is applied in:

A. Current cost accounting
B. Historical cost accounting
Current value accounting
D. Current purchasing power accounting

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Which method of accounting adjusts income and capital values to allow for the effects of general price inflation?

A. Historical cost accounting
B. Current purchasing power accounting
Current cost accounting
D. Current value accounting

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A. $262,900 B. $280,320 C. $289,700 D. $585,700

Overstatement of profits can arise during periods of inflation. This then leads to a number of other consequences. Which of the following is NOT a likely consequence of overstatement of profits?

The 'physical capital maintenance' concept states that profit is the increase in the physical productive capacity of the business over the period. This concept is applied in:

Which method of accounting adjusts income and capital values to allow for the effects of general price inflation?

A. $262,900
B. $280,320
C. $289,700
D. $585,700