The purchase consideration comprised deferred consideration of 3,000,000, payable in equal instalments on 31 December 2018, 2019
Question:
The purchase consideration comprised deferred consideration of €3,000,000, payable in equal instalments on 31 December 2018, 2019 and 2020. The book value of the net assets of DAT Limited was €2.2m. This included land with a book value of €800,000 but a market value of €1.1m.
Xtra plc incurred accountancy fees of €60,000 and legal fees of €40,000 in connection with the acquisition, and €40,000 in respect of time spent by directors of Xtra ple.
Requirement
(i) Calculate the goodwill to be dealt with in the consolidated financial statements of Xtra ple for the year ended 31 December 2017.
(ii) Explain clearly the treatment of the deferred consideration in the statement of profit or loss and other comprehensive income of Xtra ple for the year ended 31 December 2017 and the statement of financial position at that date
Step by Step Answer:
International Financial Accounting And Reporting
ISBN: 9781912350025
6th Edition
Authors: Ciaran Connolly