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Hi Mike!! I did complete the information, that you can understand the background of my question. May you help me with that? Thanks for your prior replies!
Thanks for your reply, there we go. The exercise is:
F7 Practice Queston book Kaplan;
Peterlee is preparing its FS for 31.03.06 as following;
i) Peterlee aquired the entire share capital of Trantor during the year. Acquisition achieved through exchange share. This exchange were based on the realtive values of the two companies obtained by capitalizing the companies’ estimated future cash flows. When the fair value of Trantor’s identifiable net assets was deducted from the value of the company as a whole, its goodwill was calculated at $2,5 million. A similar exercise valued the goodwill of Peterlee at $4 million. The directors wish to incorporate both the goodwill values in the companies’ consolidaded statements.
Question: describe and quatify where possible how Peterlee should treat this transaction.
Solution:
May you help me?