Topic 4 Flashcards
60 000 of 75 000 shares = 0.8 ownership
Z Ltd’s cost of acquisition = $96 500
Total cost of acquisition = $96 500/0.8 = $120 625
less Net assets = $91 245
Goodwill on acquisition = $29 380
V Ltd:
Unrealized profit – $2 400
Deferred tax asset – $2 400 x 0.3 = $720
Dr. Retained earnings 1 680
Dr. Income tax expense 720
Cr. Opening inventory 2 400
Non-controlling interest:
Dr. Retained earnings x 0.3 504
Fair value of net assets = $60 000 / 0.75 = $80 000
Consideration paid by A Ltd = $60 000
Total goodwill = $20 000
A Ltd – Goodwill = 20 000 x 0.75 = $15 000
NCI – Goodwill = 20 000 x 0.25 = $5 000
Total net assets = assets - liabilities
= 95 000 – 47 000 = $48 000
Acquirer Ltd cost of acquisition = $45 000
Total cost of acquisition = 45 000 / 0.75 = $60 000
Total goodwill = total cost - net assets
= 60 000 - 48 000 = $12 000
NCI’s goodwill = 12 000 x 0.25 = $3 000
