ABC Ltd acquires 100 per cent of RedCarpet Ltd on 1 July 2021. ABC Ltd pays the shareholders of RedCarpet Ltd the following consideration: Cash 35 000 Plant and equipment fair value $125 000; carrying amount in the books of ABC Ltd $85 000 Land fair value $150 000; carrying amount in the books of ABC Ltd $100 000 There are also legal fees of $95 000 involved in acquiring RedCarpet Ltd. On 1 July 2021 RedCarpet Ltd’s statement of financial position shows total assets of $300 000 and liabilities of $150 000. The fair value of the assets is $400 000. Required: b) And discuss the potential for including associated legal fees into the cost of acquiring RedCarpet using appropriate accounting standard.
ABC Ltd acquires 100 per cent of RedCarpet Ltd on 1 July 2021. ABC Ltd pays the shareholders of
RedCarpet Ltd the following consideration:
Cash 35 000
Plant and equipment fair value $125 000; carrying amount in the books of ABC
Ltd $85 000
Land fair value $150 000; carrying amount in the books of ABC
Ltd $100 000
There are also legal fees of $95 000 involved in acquiring RedCarpet Ltd.
On 1 July 2021 RedCarpet Ltd’s
liabilities of $150 000. The fair value of the assets is $400 000.
Required:
b) And discuss the potential for including associated legal fees into the cost of acquiring
RedCarpet using appropriate accounting standard.
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