Determine cost of acquisition Example: Cost of acqulsitionCompany P acquired 80% of the shares of Company S when the fair value of thenet assets of S was Rs. 800,000.The purchase price was Rs. 300,000 in cash plus 10,000 new shares in CompanyP.The new shares were to be issued 1 month after the date of acquisition.The market value of P's shares at the date of acquisition was Rs.40 each. Onemonth later the market value had increased to Rs.45.The costs of making the acquisition were Rs. 80,000.

Cost of acquistion is the cost of acquiring assets of the company . As…

Answered: Example: Cost of acquisition n

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 6MCQ: Ames Corporation repurchases 10,000 shares of its common stock for $12 per share. The shares were...

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Ames Corporation repurchases 10,000 shares of its common stock for $12 per share. The shares were originally issued at an average price of $10 per share. Later it resells 6,000 of the shares for $15 per share and the remaining 4,000 shares for $17 per share. How much gain or loss should Ames report on its income statement as a result of these transactions? $38.000 gain $0 $20,000 loss $20,000 loss and $38,000 gain
Zaata Ltd decided to repurchase 500,000 of its ordinary shares under a buy-back scheme for $5.70 per share. At the date of the buy-back, the equity of the company consisted of: Share capital (6,000,000 shares fully paid) General reserve Retained earnings $ 12,000,000 1,360,000 2,460,000 The costs of the buy-back scheme amounted to $7,600. Instructions: A.Prepare the journal entries to account for the buy-back, assuming: (i)that the original amount of the shares is eliminated from Share Capital, and then any remaining buy-back price adjusted equally against the General Reserve and Retained Earnings accounts. (ii)that the buy-back is not adjusted against share capital, but is adjusted firstly against the General Reserve account, then any remaining against the Retained Earnings account. B.Assume now that the buy-back price per share was equal to $2.40 and that the company had no General Reserve account, and retained earnings of only $1,040,000. Further, assume that the company…
During 20x1, Windy Co. acquired 10,000 shares of Morning Corp. at P50 per share. Windy Co. paid transaction costs of P25,000 on the acquisition. On Dec. 31,20x1, the fair value of the shares declined to P25 per share. Windy Co. assessed that the decline in fair value will persist over a long period of time. What amount of loss should Windy Co. recognize on Dec. 31, 20x1 if the shares were classified as: a. FVPL asset: 250,000 P/L , FVOCI asset: 275,000 P/L b. FVPL asset: 250,000 P/L , FVOCI asset: 275,000 OCI c. FVPL asset: 250,000 P/L , FVOCI asset: 25,000 OCI d. FVPL asset: 250,000 P/L , FVOCI asset: 0

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