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Kaplan exam kit question, not enough information?

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Kaplan exam kit question, not enough information?

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  • March 27, 2021 at 4:33 pm #615336
    Ocean2k20
    Member
    • Topics: 11
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    Hi, I’m having an issue with a multi task question from the Kaplan exam kit (pg159)
    Pike and Salmon – Pike acquired 75% of the issued share capital of Salmon on 01/01/06 for 8.72 million. Also Pike invested 1million of Salmons 5% loan notes at par value. Financial statements at 31/03/06
    Equity
    Pike
    Share Capital. –
    Retained earnings –

    Salmon
    Share Capital –
    Retained earnings – 1,290,000

    Pike
    Total equity – 21,680,000
    Salmon
    Total equity – 6,090,000

    Non-current liabilities
    Pike
    5% loan notes 2009. 16,440,000
    Current Liabilities 2,640,000
    Salmon
    5% loan notes 2009. 11,180,000
    Current Liabilities 1,410,000

    – At acquisition, fair value of land owned by Salmon exceeded cost by 1,000,000, still owned at 31/03/06

    -During post-acquisition period, Salmon sold goods to Pike for 500,000, on which it earned a margin of 10%. 80% of the goods remained in inventory at year end and Salmon owed half of the total amount to Pike.

    -Fair value of the non controlling interest in Salmon at the date of acquisition was 2.4 million

    – For year end 31/03/06, Salmon made a profit after tac of 240,000

    How do we calculate the fair value of net assets of Salmon at the date of acquisition? The three options say 4,800,000 + ……, but I don’t understand where this figure comes from?

    Thanks!!!

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