The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares each valued at $1.50. The summary statement of the financial position of the subsidiary company immediately following the acquisition is: Fair value of assets acquired Fair value of liabilities acquired Total shareholders' equity of the subsidiary company Retained earnings of the subsidiary company $2,640,000 $720,000 $800,000 $1,120,000 Required: (a) Pass the necessary journal entry to record the acquisition .. (b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company, (d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50 .
The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares each valued at $1.50. The summary statement of the financial position of the subsidiary company immediately following the acquisition is: Fair value of assets acquired Fair value of liabilities acquired Total shareholders' equity of the subsidiary company Retained earnings of the subsidiary company $2,640,000 $720,000 $800,000 $1,120,000 Required: (a) Pass the necessary journal entry to record the acquisition .. (b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company, (d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50 .
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 33P
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Transcribed Image Text:The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares each
valued at $1.50. The summary statement of the financial position of the subsidiary company immediately
following the acquisition is:
Fair value of assets acquired
Fair value of liabilities acquired
Total shareholders' equity of the subsidiary company
Retained earnings of the subsidiary company
$2,640,000
$720,000
$800,000
$1,120,000
Required:
(a) Pass the necessary journal entry to record the acquisition ..
(b) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition
(c) Pass the necessary consolidation entry to eliminate the subsidiary by the parent company,
(d) Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase
consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50 .
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