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- June 1, 2021 at 4:58 pm #622668AnonymousInactive
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Roe Co acquired 80% of the share capital of Gallant Co on 1 October 20X7. The consideration was a cash
payment of $6 and four $0.50 shares in Roe Co, worth $2.50 each, for each share in Gallant Co. Both
companies have an accounting year end of 31 March.
On 1 October prior to the acquisition, Roe Co had issued share capital of 750,000 $0.50 shares and a share
premium account of $165,000. Roe Co’s retained earnings as at 1 April 20X7 were $760,000 and its retained
profits for the year ended 31 March 20X8 were $280,000.
At 1 April 20X7 Gallant Co had issued share capital of 50,000 $1 shares and retained earnings of $520,000.
Gallant Co did not issue any shares between 1 April and 1 October 20X7. During the year ended 31 March
20X8 Gallant made a profit of $150,000, which accrued evenly over the year. The fair value of the noncontrolling interest at 1 October 20X7 was $110,000.
There were no intra-group transactions during the year ended 31 March 20X8.
Required
(a) Complete the following proforma to calculate the goodwill arising on the acquisition of Gallant Co.
Consideration transferred on acquisition:June 1, 2021 at 5:37 pm #622682There is no point in typing out a full question and expecting to be provided with a full answer – that is not what we are here for!
You must have an answer in the same book in which you found the question and so ask about whatever it is in the answer that you are not clear about and then I will explain.
Obviously everything needed to be able to answer this question is covered in our free lectures. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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