Problem #4 Assuming the following transaction details for an acquisition, calculate the amount of goodwill that will be recorded on the transaction: Purchase consideration given = 45.5 million shares issued, plus $26,000,000 of cash Share price on the closing date of the transaction = $12.30 per share The target company had a cash balance of $12,800,000 on the closing date of the transaction. The fair value of non-cash assets acquired in the transaction = $820 million The fair value of the target company's liabilities acquired = $388 million
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- Question 4 Assume that Company A acquires 70 per cent of Company B for a cash price of $14 million when the share capital and reserves of Company B are: Share capital $8 million Retained earnings $2 million $10 million 1)What amount of goodwill will be shown in the consolidated statement of financial position pursuant to AASB 3 assuming that any non-controlling interest in the acquirer is measured at fair value? 2)What amount of goodwill will be shown in the consolidated statement of financial position pursuant to AASB 3 assuming that any non-controlling interest in the acquirer is measured at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets? 3)Pass the necessary consolidation journal entries and the journal entries to record the non-controlling interest if the non-controlling interest in the…1. What is the gain on remeasurement to equity to be recognized for 2021?a. 1,500,000b. 4,500,000c. 2,250,000d. 0 2. What is the goodwill arising from the acquisition on January 1, 2021?a. 2,250,000b. 1,250,000c. 1,350,000d. 350,000 3. What is the carrying amount of the investment in associate on December 31, 2021?a. 11,250,000b. 11,800,000c. 12,000,000d. 14,300,000Part IV: Problem solving: Answer the following questions showing all the steps conducted to find the final answer. Lion Bank had $150 million in assets and $40 million in expenses before the acquisition of Sell Bank, which had assets of $50 million and expenses of $10 million. After the merger, the bank had $180 million in assets and $60 million in costs (Round to three decimal places). What is the cost percentage before the acquisition? What is the cost percentage after the acquisition? What is the best option that describes this acquisition? Choose one option only. - Economies of scale - Diseconomies of scale - Economies of scope - Diseconomies of scope
- Question 6 Week 12 On 1 July 2014 Padma Ltd acquires 25 per cent of the issued capital of Jamuna Ltd for a cash consideration of $360 000.At the date of acquisition, the shareholders’ equity of Jamuna Ltd is:Share capital $450 000Retained earnings $300 000Total shareholders’ equity 750 000Additional information• On the date of acquisition, buildings have a carrying amount in the accounts of Jamuna Ltd of $240 000 and amarket value of $300 000. The buildings have an estimated useful life of 10 years after 1 July 2014.• For the year ending 30 June 2015 Jamuna Ltd records an after-tax profit of $90 000, from which it pays adividend of $30 000.• For the year ending 30 June 2016 Jamuna Ltd records an after-tax profit of $300 000, from which it pays adividend of $150 000.• Assume a tax rate of 30% is assumedRequiredApply equity method of accounting to:(a) Calculate the amount of goodwill at the date of acquisition (b) Prepare the journal entries for the year ending 30 June 2015 (c) Prepare…PROBLEM 32Guillen Company acquired 30% of ABC Corporations share for P8,000,000 on July 1, 2020. ABC Corporation’s identifiable net assets on the date of acquisition are P20,000,000. Guillen believes that the investee has known goodwill and the fair value of the corporation's net assets is the same as itscarrying amount except for the following: a. Equipment is undervalued by P2,000,000.b. Inventory’s fair value is P2,000,000 greater than its carrying amount. The equipment has a remaining life of 4 years and depreciated using the straight-line method. At the end of 2020, all inventories at the acquisition date are entirely sold. On November 30, ABC Corporation pays a P2,000,000 dividend to its shareholders. During the year,ABC Corporation reported a net income of P5,000,000, 40% of these were earned in the first half ofthe year. The fair value of ABC Corporation's shares held by Guillen at the end of 2020 is P8,250,000. Requirements:1. Prepare the necessary journal entries to record…Question 1 Ewig Berhad acquired 800, 000 out of the 1, 000, 000 RM1 ordinary shares of Leben Berhad on 1 January 2020 for RM900, 000 cash. The general reserves and retained earnings of Leben Berhad at the date of acquisition were RM400, 000 and RM250, 000 respectively. Required: (a) What is the percentage of acquisition by Ewig Berhad? (b) What is the corporate relationship in this situation? (c) Based on MFRS 10, briefly explain whether Ewig Berhad exercises control over Leben Berhad. (d) Assuming the proportional net asset method is used, what is the fair value of the NCI? (e) What is the goodwill or bargain purchase?
- PROBLEM 35At the beginning of 2018, Esterlina Corporation purchased 40% of the ordinary shares outstanding of Mary Grace Incorporated for P15,000,000 when the net assets of Mary Grace Incorporated amounted to P30,000,000. At the acquisition date, the carrying amounts of the identifiable assets and liabilities of Mary Grace Incorporated were equal to their fair value, except for the following: a. Equipment whose fair value was P7,000,000 greater than its carrying amount.b. Inventory whose fair value was P2,500,000 greater than its carrying amount. The equipment has a remaining life of 4 years, and the inventory was all sold during 2013. Mary Grace Incorporated has two classes of shares: Ordinary shares (par value, P100), 300,000 shares outstanding, 15% cumulative preference shares (par value, P50), 100,000 shares outstanding. The investee reported the following net income (inclusive of enter-company transactions) and payment of cash dividend: 2018…Assume that Company A acquires 70 per cent of Company B for a cash price of $14 million when the share capital and reserves of Company B are: Share capital $8 million Retained earnings $2 million $10 million a) What amount of goodwill will be shown in the consolidated statement of financial position pursuant to AASB 3 assuming that any non-controlling interest in the acquirer is measured at fair value? (b) What amount of goodwill will be shown in the consolidated statement of financial position pursuant to AASB 3 assuming that any non-controlling interest in the acquirer is measured at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets?Problem 1Parekoy Company acquires 150,000 of the 1,000,000 Marekoy Company’s common stock for P500,000 cash and carries the investment as a financial asset. A few months later, Parekoypurchases another 600,000 of Marekoy Company’s stock for P2,160,000. At that date, Marekoy Company reports identifiable assets with a book value of P3,900,000 and a fair value of P5,100,000, and it has liabilities with a book value and fair value of P1,900,000. The fair value of the non-controlling interest in Marekoy Company is P900,000. 1.Non-controlling interest arising on consolidation is to be valued on the full (fair value) basis or “Full/Gross-up” Goodwill:a. P300,000b. P500,000c. P800,000d. P900,0002. The remeasurement gain or loss to be recognized to profit and loss account if the 15% ownership is a FVTPL (fair value through profit and loss)when the additional shares are acquired:a. Zerob. P40,000 gainc. P40,000 lossd. P68,000 loss3. The remeasurement gain or loss to be recognized to profit or…
- Problem 1Parekoy Company acquires 150,000 of the 1,000,000 Marekoy Company’s common stock for P500,000 cash and carries the investment as a financial asset. A few months later, Parekoypurchases another 600,000 of Marekoy Company’s stock for P2,160,000. At that date, Marekoy Company reports identifiable assets with a book value of P3,900,000 and a fair value of P5,100,000, and it has liabilities with a book value and fair value of P1,900,000. The fair value of the non-controlling interest in Marekoy Company is P900,000. 1. Goodwill arising on consolidation is to be valued on the proportionate basis or “Partial” Goodwill a. P 84,000b. P100,000c. P300,000d. P400,000 2. Non-controlling interest arising on consolidation is to be valued on the proportionate basis or “Partial” Goodwill:a. P300,000b. P500,000c. P800,000d. P900,000 3. Goodwill arising on consolidation is to be valued on the full (fair value) basis or “Full/Grossup” Goodwill:a. P 84,000b. P100,000c. P300,000d. P400,000QUESTION 20 On January 1, 20X9, Pirate Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash. The fair value of the noncontrolling interest at that date was determined to be $40,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Pirate Corp. Sea-Gull Corp. Cash $ 60,000 $ 20,000 Accounts Receivable 80,000 30,000 Inventory 90,000 40,000 Land 100,000 40,000 Buildings and Equipment 200,000 150,000 Less: Accumulated Depreciation (80,000 ) (50,000 ) Investment in Sea-Gull Corp. 160,000 Total Assets $ 610,000 $ 230,000 Accounts Payable $ 110,000 $ 30,000 Bonds Payable 95,000 40,000 Common Stock 200,000 40,000 Retained Earnings 205,000 120,000 Total Liabilities…Accounting a) What do you understand by Goodwill? b) Bigger n Better Pty Ltd has just acquired the Tiny Tots business. The fair value of Tiny Tots' net assets as at the date of acquisition is $1 855 000. Bigger n Better Pty Ltd has agreed to pay the owners of Tiny Tots $1 000 000 in cash and give them 100 000 shares in Bigger n Better Ltd, valued at $10 per share. Calculate the goodwill that would be recognized in Bigger n Better Pty Ltd's balance sheet immediately after the acquisition. please do not plagiarize from other sources thanx