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Goodwill on acquistion

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Goodwill on acquistion

  • This topic has 4 replies, 2 voices, and was last updated 10 years ago by ahmed02.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • June 18, 2015 at 3:40 pm #257748
    ahmed02
    Member
    • Topics: 17
    • Replies: 15
    • ☆

    X co acquired 75% of Y Co’s 100,000 $1 ordinary share capital on 1Nov 2011. The consideration consisted of $2 cash per share and 1share in X Co for every 1 share acquired in Y Co.
    X Co. shares have a nominal value of $1 and a fair value of $1.75. The fair value of the non-controlling interest was $82,000 and the fair value of net assets acquired was $215,500.
    Answer: $147,750.
    Sir i need to know the net asset of subsidiary Y and the investment of X pls??

    June 18, 2015 at 5:49 pm #257784
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The net assets of Y are $215,500

    The consideration paid by X is (75% x 100,000) 75,000 x ($2 + $1.75) = 281,250

    Therefore the goodwill is (281,250 + 82,000) – 215,500 = 147,750

    June 19, 2015 at 6:34 pm #258100
    ahmed02
    Member
    • Topics: 17
    • Replies: 15
    • ☆

    Thank you sir.
    I have another qustion:(Debt Ratio)
    tangible non-current asset $133750
    intangible asset $15800
    inventory $27400
    recivables $17430
    Cash$3200
    bank overdraft $1500
    trade payables $34340
    long-debt $50000
    provision$5700
    The debt ratio answer is 46.3%.
    What will be the equity? the provision account is it current or non-current libility?

    June 19, 2015 at 7:26 pm #258108
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    In future, please start a new thread if you are asking a question on a different topic.

    A provision can be current or non-current – it depends on what it relates to.

    I don’t know where you found this question, but it could not possibly be asked in this way in the exam. (Also ‘debt ratio’ is not a standard term and would not be used in the exam without it being defined)

    The equity is equal to the total assets less the total liabilities.

    June 19, 2015 at 8:24 pm #258115
    ahmed02
    Member
    • Topics: 17
    • Replies: 15
    • ☆

    Sorry for this sir. 🙁
    The main problem is provision. The question didn’t tell about the type of provision.So what i have to do with the provision?

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