On 1 January 2006 Salvatore Limited acquired 197 500 of the issued shares of Gilbert Limited when the retained earnings amounted to R45 000. On the acquisition date the fair value of the identifiable assets, liabilities and contingent liabilities of Gilbert Limited were considered to be equal to the carrying amounts thereof, except for the following items:
Carrying amount Fair Value
Land 53 000 68 000
Inventories 430 000 427 000
Trade and other receivables 115 000 107 000.
How do i find the bargain on purchse if Gilbert Ltd has 250 000 shares in issue, but total share capital is 300 000. The fair value of Gilbert’s share on acquisition date is 1.5 per share. The investment in Gilbert amounts to 280 000 at fair value in the books of Salvatore Ltd as at 28/2/2011.
I, quite simply, cannot understand your final paragraph. To be brutally blunt, it makes no sense at all to me!
do well to structure your question very well, it isnt at the moment.
do this ASAP.
This post is still making no sense to me Secilia – are you going to try again?
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