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Hi, can you please help me with this question?I I just ahve a problem with calculating the consideration transferred.
Cloud obtained a 60% holding in the 100,000 $1 share s of Mist on 1 January 2008, when the retained earnings of Mist were $850,000. Consideration comprised $250,000 cash, $400,000 payable on 1 January 2009 and one share in cloud for each two shares acquired. Cloud has a cost of capital of 8% and the market value of its shares on 1 January 2008 was $2.30.
Cloud measures non controlling interest at fair value. The fair value of non controlling interest at 1 January 2008 was estimated to be $400,000.What was the goodwill arising on acquisition?
A) $139,370
B) $169,000
C) $119,370
D) $130,370The value of the consideration paid / to be paid on the acquisition of Mist is:
$250,000 Cash
$ 69,000 30,000 shares @$2.30 each
$370,370 present value of $400,000 payable in 12 months’ timeGiving a total consideration of $689,370
OK?
We issue “and one share in cloud for each two shares acquired”
We acquired 60% of 100,000 shares
Therefore how many did we issue?
Have you tried / followed the example at the end of chapter 8 in the free course notes?
Or watched the video where I work through that example slowly?
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