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Exam kit
On 30 June 20X4 GHI acquired 800,000 of JKL’s 1 million shares.
GHI issued 3 shares for every 4 shares acquired in JKL. On 30 June 20X4 the market price of a
GHI share was $3.80 and the market price of a JKL share was $3.
GHI agreed to pay $550,000 in cash to the existing shareholders on 30 June 20X5. GHI’s
borrowing rate was 10% per annum.
GHI paid professional fees of $100,000 for advice on the acquisition.
What is the cost of investment that will be used in the goodwill calculation in the
consolidated financial statements of GHI?why wasn’t professional fees not included in the answer?
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