Solution
Ishmeet Singh answered on
Oct 21 2021
Sol’n a:
Acquisition Analysis on 1st July,2018
Net Fair Value of Idenifiable Assets at Sons Ltd.
No. of Shares
500000
Price per share
$2.00
Total Share Capital
$1,000,000.00
Retained Earnings
$500,000.00
Equivalent to NAV @ ca
ying amount
$1,500,000
Inventory
Fair Value
50,000
Ca
ying Cost
40,000
Fair Value adj after tax
10,000*(1-30%)
7000
Plant @$500,000
Fair Value
350,000
Ca
ying Cost
300,000
Fair Value adj after tax
50,000*(1-30%)
35000
Provision for damages
50,000
after tax
35000
Net Fair Value considering all identifiable assets and liabilities
$1,507,000.00
Consideration Transfe
ed
2057000
Dividend payable by year end
50000
Net Consideration payed
$2,007,000
Therefore, by partial goodwill method
Goodwill
$507,000
will be taken in non-cu
ent assets
Formula for partial goodwill method:
Partial Goodwill = Acquisition Price * (Acq. Percentage * fair value of subsidiary net identifiable assets)
Non controlling interest = Acquisition Price * (NCI Percentage * fair value of subsidiary net identifiable assets)
Sol’n b:
Worksheet Entries at 30th June,2020
INVENTORY:
Ca
ying Amt.
Fair Value
40,000
50,000
Worksheet entries at 31st Dec,2018
Inventory
D
6,000
~60%
Deffered tax liability
C
1800
Business combination valuation...