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I benefited from you explanation here Mr. MikelLittle. So I am saying thank you.
And also to Bilaliqbal, thanks for bringing this up too.
please permit me to indulge you a little more on a similar but extended question. i use the same names for continuity.
Assuming all the information above remain the same as shown below
on 1 october 2012 zed acquired 75% of bee’s equity shares by means of a share exchange of two new shares in zed for every five acquired shares in bee. in addition, zed issued to the shareholders of bee a $100 10% loan note for every 1000 shares it acquired in bee.
the market value of zed at 1 october 2012 was $2 each.
zed shares 40,000 at $1 nominal price.
bee’s shares 20,000 at $1 nominal price.BUT THE examiner added the following in the balance sheet as at the reporting date:
zed bee
investment(note 1) 7,500 3,200note 1: at the date of ACQUISITION, zed carried out a fair value exercise on bee’s financial asset equity investment which were equal to the carrying amount.
but The fair values as at the REPORTING DATE are $7,100 for zed and $3,900 for bee.
please what implication does these additional information pose on the $12, 000 (cost of combination-equity) and $1,500 (cost of combination-debt) which you computed earlier for me.
many thanks
apologies for my scanty information. i’ll go back and look at the mini exercises immediately. meanwhile please see the full details of the question:
on 1 october 2012 zed acquired 75% of bee’s equity shares by means of a share exchange of two new shares in zed for every five acquired shares in bee. in addition, zed issued to the shareholders of bee a $100 10% loan note for every 1000 shares it acquired in bee.
the market value of zed at 1 october 2012 was $2 each.
zed shares 40,000 at $1 nominal price.
bee’s shares 20,000 at $1 nominal price.
many thanks