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Hi sir, are this question have any deferred consideration? if have how much is it?
On 1 October 2012, Paradigm acquired 16 million of Strata’s equity shares by means of a share exchange of two new
shares in Paradigm for every five acquired shares in Strata. In addition, Paradigm issued to the shareholders of
Strata a $100 10% loan note for every 2,000 shares it acquired in Strata.The Paradigm also agree paid a further $2million. Paradigm has not recorded any of the purchase consideration, although it does have other 10% loan notes already in issue.
The market value of Paradigm’s shares at 1 October 2012 was $3 each and the cost of capital 5%.
Strata’s Share capital @ $1 each = $20 millionThere is cost of capital 5% indicating likeliness of deferred consideration is high but I can’t find when is paradigm going to pay the $2M.
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