- September 25, 2021 at 11:21 am #636467acca2021yaseminMember
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297 Paradigm Co
(8 marks) (4 marks)
On 1 October 20X2, Paradigm Co acquired 75% of Strata Co’s equity shares by means of a share exchange of two new shares in Paradigm Co for every five acquired shares in Strata Co. In addition, Paradigm Co issued to the shareholders of Strata Co a $100 10% loan note for every 1,000 shares it acquired in Strata Co. Paradigm Co has not recorded any of the purchase consideration, although it does have other 10% loan notes already in issue.
The market value of Paradigm Co’s shares at 1 October 20X2 was $2 each. The summarised statements of financial position of the two companies at 31 March 20X3 are:
Paradigm Co $’000
ASSETS Non-current assets
Property, plant and equipment Financial asset: equity investments (note (i)) Current assets Inventories (note (ii))
Trade receivables (note (iii)) Bank
EQUITY AND LIABILITIES Equity
Equity shares of $1 each Retained earnings/(losses) – at 1 April 20X2 – for year ended 31 March 20X3
Non-current liabilities 10% loan notes
Trade payables (note (iii)) Bank overdraft
Total equity and liabilities The following information is relevant:
(i) At the date of acquisition, Strata Co produced a draft statement of profit or loss which showed it had made a net loss for the year of $2 million at that date. Paradigm Co accepted this figure as the basis for calculating the pre- and post-acquisition split of Strata Co’s profit for the year ended 31 March 20X3.
I dont understand how they have calculted the total loss as 10K for Strata & why?. please help.
strata as per draft 4000?
add back before purchase loss: 6000?
total 10 KSeptember 29, 2021 at 9:06 pm #636715P2-D2Keymaster
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Sorry but I think more information within the question would be required here to help you. Send it over and I can help.
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