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Hyflux Ltd acquired 2.4 million shares of Sunny Ltd on 1 Oct 2009, by issuing two of its own shares for
every three shares in Sunny Ltd and a deferred payment of $1.00 for every eight Sunny Ltd shares
payable on 1 Oct 20011. Hyflux Ltd’s share was trading at a market price of $2.00 on 1 Oct 2009; the
present value of the cash consideration is equal to $0.80 at a discount rate of 12% per annum. The
deferred cash consideration has not been recorded as part of the investment.
Hyflux Ltd Sunny Ltd
Equity and liabilitiesEquity shares 6,000 3,000
Accumulated profits 620 340
______ _____
6,620 3,340
Please the question above is an extract of ACCA F7 mock exams. I am confused as to how the deferred payment will be computed so please help me out.
Anyway i got to know your email address on the net and that you are very good in ACCA qualification.
Seriously waiting for your solution.
Thank you.papaabee@yahoo.com
Is it not 2,400,000 ( shares ) / 8 * $1 = 4300,000 payable in two years’ time. So, $300,000 * .8 ( present value of $1 in two years’ time ) = $240,000.
Please how did you get the figure 4300,000? i’m rather getting 300,000 instead
papaabee@yahoo.com
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