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On 1 oct 20X5 Luton acquired 70% of the issued equity capital of Bedford.In exchange for gaining control of Bedford,Luton made immediate cash payment of $4.50 per share acquired and also issued one new share for each share acquired.At the date of acquisition,Bedford had issued share capital of 55 million shares of $1 nominal value and a share premium account balance of $5million.On 1 October 20X5, Bedford had retained earnings of 76.875 million and the fair value of non controlling interest in Bedford was $27 million.Bedford had a freehold factory that had a fair value of $2 million in excess of its carrying amount at the date of acquisition.The fair value of a $1 equity share of Luton at the date of acquisition was $5.00 per share.
What was goodwill on acquisition of Bedford for inclusion in the consolidated financial statement of Luton for the year ended 30 september 20X6?
Please do not set test questions and expect an answer.
You must have an answer in the same book in which you found the question (if not, then you should be using a Revision Kit from one of the ACCA approved publishers – they have answers and workings!). Ask about whatever it is in the answer that you are not clear about and then I will help you.
Have you watched my free lectures on consolidations? Because everything needed to answer this question is cover in detail in my lectures.
The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
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