Question: Taking the data of Problem 1, consider that BL purchased 40% equity of HL at a cost of 3,00,000 and there was no difference between

Taking the data of Problem 1, consider that BL purchased 40% equity of HL at a cost of ₹3,00,000 and there was no difference between the book value and fair value of the assets. Then show how goodwill is to be recognized. If we further assume that the fair value of net assets increased by ₹1,00,000 over the given net book value of asset ₹6,00,000, then show how goodwill is to be recognized.

Data from Problem 1

On April 1, 2010, Bush Limited (BL) purchased 40% equity shares of Huss Limited (HL) at a cost of ₹2,40,000. The equity of HL on this date comprised

(a) Equity share capital ₹3,00,000,

(b) Securities premium ₹2,00,000,

(c) Reserve and surplus ₹1,00,000.

During the year 2010–11, GHL earned a net profit of ₹1,00,000 out of which 60% was distributed as dividend among equity shareholders. Show how BL should account for its investment in HL.

Step by Step Solution

★★★★★

3.35 Rating (155 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Goodwill when boo... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Financial Accounting Questions!

Taking the data of Problem 1, consider that BL purchased 40% equity of HL at a cost of 3,00,000 and there was no difference between the book value and fair value of the assets. Then show how goodwill...

Taking the data of Example 1, if we consider that GL purchased 30% equity of GHL at a cost of 2,15,000 and there was no difference between the book value and fair value of the assets. Then show how...

Prepare the official payroll for a Visual designer, who has 2-month seniority. He has a temporary contract. Base salary: 1,950. Collective bargaining: 100. Productivity: 6 / day. It has two...

NEED ANSWER BEFORE 11:00 IF NOT LET ME KNOWTODAY OCTOBER FIRST, THEY ASK ME FOR MORE MONEY BUT DO NOT KNOW HOW TO ADD MORE Text 1 450 A business combination is accounted for properly as an...

can any expert help me with the below assignment just only 2 questions ,please read the requirment word by word and be careful about the style of the reference(APA) , file 3.1 is for question...

just only 2 questions ,please read the requirment word by word and be careful about the style of the reference(APA) , file 3.1 is for question 2..BTW,please focus the every step FINANCE SPOTLIGHT...

This is my assignment, i need help, i have posted all the details, please submit asap. Please provide detailed report on the above information. Dxhibit 34 Firm 2 Rs. 6 min Rs. 6 min M Re. 1 8 Firm 1...

On January 1, 2015, Palmer Company acquires a 80% interest in Stevens Company at cost of $4, 000, 000. at purchase date, Stevens Companys stockholdersequity consists as following: Common stock - $2,...

Hi there, I'm looking for the solution to the Systems Understanding Aid (SUA) 9th edition. I need help with Homework. Need to complete worksheet and transaction list Transactions List Yes 29 Received...

Hello, I have assessment.. Step 1 : Calculate the following ratios for the latest five years using the O-S Checklist Approach, an Excel template . For an overview of the approach, read our article,...

Bluebird, Inc., does not provide its employees with any tax-exempt fringe benefits. The company is considering adopting a hospital and medical benefits insurance plan that will cost approximately...

Explain the following terms: character, capacity, cash, collateral, conditions, and control.

Question:Which of the following statements is not true with respect to the evidence that would be gathered when assessments of control risk are high? A ) Auditors would be required to rely on...

Based on the product/market expansion grid, provide support for the strategy that Live Nation is pursuing.

Paulson Corporation??s unadjusted trial balance at December 1, 2012, is presented below. The following transactions occurred during December.Dec. 2 Paulson purchased equipment for $16,000, plus sales...

Refer to the financial statements and the Notes to Consolidated Financial Statements of Tootsie Roll Industries in Appendix A. Instructions Answer the following questions. (a) What were the total...

The financial statements of The Hershey Company are presented in Appendix B, following the financial statements for Tootsie Roll Industries in Appendix A. Instructions (a) Based on the information in...

Morals VS Ethics Compare and contrast morals with ethics. How are they similar? How are they different? Please use at least one example to explain how morals can influence ethical decision-making....

Duning the month of lanuary. an employer incurred the following payroll taxes. FHCA Social Secunty taves of $27900. FICA Medicare taxes of $6525. FUTA taxes of $2700 and SUTA toxes of $24300 Prepare...

BY USING MATLAB ONLY. Problem: A growing number of people are becoming more health conscious watching their diet and exercising more. Statistics are available to help them monitor their progress...