XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration: Cash 79 100 Plant and equipment fair value $282 500; carrying amount in the books of ABC Ltd $192 100 Land fair value $339 000; carrying amount in the books of ABC Ltd $226 000 There are also legal fees of $214 700 involved in acquiring Red-X Ltd. On 1 July 2021, Red-X Ltd’s statement of financial position shows total assets of $339 000 and liabilities of $339 000. The fair value of the assets is $904 000. Required: Has any goodwill been acquired, and, if so, how much? And discuss the potential for including associated legal fees into the cost of acquiring Red-X using appropriate accounting standards
XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration:
|
Cash |
79 100 |
|
Plant and equipment |
fair value $282 500; carrying amount in the books of ABC Ltd $192 100 |
|
Land |
fair value $339 000; carrying amount in the books of ABC Ltd $226 000 |
There are also legal fees of $214 700 involved in acquiring Red-X Ltd.
On 1 July 2021, Red-X Ltd’s
Required:
Has any
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