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Hi sir,
the Question :
Exactly half way through the year, Hebrides acquired 80% of the share capital of
Skye and 30% of the share capital of Aran. Hebrides acquired Skye by way of share
for share exchange. Hebrides issued five of its own shares for two Skye shares. The
market value of Hebrides’ shares was $5 on that day. The share issue has not yet
been recorded. Aran shares were acquired for $500,000 cash consideration.
It is the group’s policy to value the non-controlling interest at fair value which at
acquisition was $410,000.Share capital ($1 nominal each) 1,000 200
Share premium 2,000 100
Retained earnings 9,600 760(The answer) :
Goodwill
Fair value of consideration 2,000 (split nominal 400 & premium 1600)
(200)(80%)(5/2)$5
Fair value of nci 410
Fair value of net assets (1,700)
_____
Goodwill at statement of financial position 7101) what does half way through the year means?
is it from beginning of the year to mid
OR from mid to ye ?2) should share capital and share premium always be the same at acquisition and at ye ?
3) plz sir ur full explanation for this part/figure is v much needed as I didnt understand it or how to arrive it
Fair value of consideration 2,000 (split nominal 400 & premium 1600)
(200)(80%)(5/2)$5thanks v much
Hi,
1) Halfway through the year means six-months from the start of the year, or six months from the end of the year.
2) Share capital and share premium are always the same at the reporting date and at acquisition.
3) For this you need to go back to the videos in FR and ensure that you are comfortable with share for share exchanges.
I have to say that I’m surprised that someone studying SBR is asking questions as above as these are what I would expect from someone studying FR and not SBR.
Thanks
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