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Light Ltd acquired all the assets and liabilities of Sound Ltd on 01 July 2017. At this date, the assets and liabilities of Sound Ltd
Light Ltd acquired all the assets and liabilities of Sound Ltd on 01 July 2017. At this date, the assets and liabilities of Sound Ltd consisted of the following items: SOUND LTD - 1 July 2017 Carrying Amount Fair Value Current Assets Non-Current Assets $1 000 000 $4 000 000 $980 000 $4 220 000 $5 000 000 $500 000 $5 200 000 $500 000 Liabilities $4 700 000 $ 4 500 000 ======= = = = = Share capital 100 000 shares Reserves $3 000 000 $1 500 000 ---- S4 500 000 = = = = = In exchange for these net assets, Light Ltd agreed to: 0 Issue 10 Light Ltd shares for every Sound Ltd share - Light Ltd shares were considered to have a fair value of $10 per share; o Transfer a patent to the former shareholders of Sound Ltd - the patent was carried in the records of Light Ltd at $350 000 but was considered to have a fair value of $1M. Pay $5.20 per share in cash to each of the former shareholders of Sound Ltd. O Light Ltd incurred $10 000 in costs associated with the acquisition of these net assets. Required: Calculate the amount of goodwill acquired by Light Ltd, in this business combination Clearly set out all workings
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