Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Kaplan Practice Question Book – 1.c Peterlee acquired Trantor 100%
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- November 22, 2010 at 10:05 am #46130
Peterlee’s Goodwill ………….4 million
Trantor’s Goodwill …………..2,5 million
Solution:
my view, the acquisition is a a share exchange therefore:
– goodwill of 2,5 for Trantor is acceptable
– not for Peterlee because it indicates to include trantor’s goodwill within this method.
my question:
is it right what I am thinking abou`t? otherwise I did not understood the exercise. Could someone help me please?
ThanksNovember 23, 2010 at 10:36 pm #71161Is this an F7 question – it sounds more like P2. Are these 2 subsidiaries or is it a vertical group?
Sorry, but I don’t have the Kaplan kit in front of me 🙁
November 26, 2010 at 12:58 pm #71162Thanks for your reply, there we go. The exercise is:
F7 Practice Queston book Kaplan;
Peterlee is preparing its FS for 31.03.06 as following;
i) Peterlee aquired the entire share capital of Trantor during the year. Acquisition achieved through exchange share. This exchange were based on the realtive values of the two companies obtained by capitalizing the companies’ estimated future cash flows. When the fair value of Trantor’s identifiable net assets was deducted from the value of the company as a whole, its goodwill was calculated at $2,5 million. A similar exercise valued the goodwill of Peterlee at $4 million. The directors wish to incorporate both the goodwill values in the companies’ consolidaded statements.
Question: describe and quatify where possible how Peterlee should treat this transaction.
Solution:
May you help me?November 26, 2010 at 10:11 pm #71163OK, I can see where the 2.5m comes from. But where is the 4m from?
November 28, 2010 at 10:15 am #71164ok..now is completed
November 28, 2010 at 3:35 pm #71165welcome
December 7, 2010 at 3:17 pm #71166Hi Mike!! I did complete the information, that you can understand the background of my question. May you help me with that? Thanks for your prior replies!
December 7, 2010 at 3:31 pm #71167Hi
No, it still doesn’t make sense to me! Why is Peterlee ( I presume that this is the parent company ) valuing its own goodwill and trying to recognise it as an asset? I really do not understand! Sorry 🙁
December 7, 2010 at 3:43 pm #71168question 52, page 56? Peterlee CANNOT recognise its own goodwill – see the answer.
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