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hello mr john
can u plx help me wd dis questiontempco acquired 100% of the quity shared capital of lentco, this consisted of 40000 sharef of $0.5 each . it paid for the auisition by issuing 60000 new shared of $1 each in tempco and exchanging 3 new shared in tempco for every 2 shares in lentco.
the market value of tempco shres at the time of aquisition was $3.5 pr share. the Fairvalue of the net assets aquired in lentco was $50000.
wat ws the goodwill arisin on aquisotion of the shres in lentco by tempco
answer: 160000
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my question is that the way dey hav solved it cant unrstnd the logic behind it..maybe i got confused wd so much info they hv given ..bt cn u plx xplain me..if such type of question we get hw r we supposed to knw which xplanation is relevnt or nt?
n i m facing lots of probs in consolidation …which study text should i go for detailed info abt these thngss..i knw the easy part of consolidation bt still nt thst gud wd de concpts ….as i m nt frm a comrce backgroud just got into f3 ds frst tym…..- Topics: 0
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I am also at a loss to understand the logic behind the answer. As I see it:
Purchase consideration 60000 shares @ $3.50 —- 195000
Fair value of net assets acquired ————————— 50000
Goodwill on acquisition —————————————-145000You have made an arithmetic mistake – 60,000 x $3.50 = 210,000!!
(Then you end up with the correct answer).There is no ‘best’ Study Text – everybody has their own tastes. However, all you need for consolidations for the exam is in our Course Notes and lectures. Better than buying a Study Text is to buy a Revision/Exam Kit and keep practising and practicing questions.
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Sorry for the error. May I suggest esti you should consult Frank Wood’s Business Accounting 2 which covers group accounts in sufficient detail which helps a non commerce student to grasp the subject.
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