Question
Calculate the cost of investment for the following scenarios: June Berhad, a public listed company, acquired 600 million equity shares in August Berhad on 1
Calculate the cost of investment for the following scenarios:
June Berhad, a public listed company, acquired 600 million equity shares in August Berhad on 1 April 2020. The purchase consideration was made up of: A share exchange of one share in June Berhad for two shares in August Berhad, the issue of RM100, 10% loan note for every 500 shares acquired; and a deferred cash payment of RM1.10 per share acquired payable on 1 April 2021. June Berhad has only recorded the issue of the loan notes. The value of each June Berhad share at the date of acquisition was RM10 and June Berhad has a cost of capital of 10% per annum.
[15 marks]
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