11..

(a) Assume that on 1 January 20X7 Parent Ltd acquired all the ordinar y shares in Daughter Ltd for

£10,800 cash. The fair value of the net assets in Daughter Ltd was their book value.

(b) The purchase consideration was satisfied by the issue of 5,400 new ordinar y shares in Parent Ltd. The fair value of a £1 ordinar y share in Parent Ltd was £2. The fair value of the net assets in Daughter Ltd was their book value.