Hi,
I was stuck at figuring out what the deferred consideration was for this particular question.
Expander Plc wishes to acquire a 70% stake in Target plc by purchasing 280 million of Target’s 400
million £1 ordinary shares. Target currently has retained earnings of £1,360 million and is not
expecting to issue any shares or pay any dividends in the immediate future. The purchase of Target
will be paid for through a combination of immediate and deferred cash payments.
Expander will pay £5,000 million of cash at the date of acquisition, plus a further £2,000 million in
two years’ time.
Would really appreciate it if you could help.
Thanks
Ask the Tutor ACCA FA
Deferred Consideration
5y ago#1The total consideration is $7,000m of which $5,000m is paid immediately and $2,000m is deferred and paid in 2 years time.
However I am puzzled where you found this question because depending on what is asked in the question, dealing with this completely is not in the syllabus for Paper FA.
Thank you for your help. This is the advanced financial accounting question
5y ago#3You are welcome (and Paper FA is not advanced financial accounting!)
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