Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On 1 July 20X1 McCarney plc and Donaldson plc each acquired 50% of Armstrong plc. The consideration paid by Donaldson plc consisted of cash of

On 1 July 20X1 McCarney plc and Donaldson plc each acquired 50% of Armstrong plc. The consideration paid by Donaldson plc consisted of cash of $8 per share and also a 1 for 20 share exchange when the share price of Donaldson plc was $10 each. McCarney plc also paid $8 per share for their interest but did not issue any shares to the original shareholders of Armstrong plc. The ordinary shares of Armstrong plc have one voting right each.

Following the acquisition, Donaldson had the contractual right to appoint 68% of the board of Armstrong with the remaining 32% appointed by McCarney plc.

McCarney had veto rights over any amendments to the articles of incorporation of Armstrong and also over the appointment of the auditors.

McCarney plc and Donaldson plc each appoint one member to Armstrongs senior management team.

It is the senior management team at Donaldson plc who make key decisions regarding the development of Armstrongs new products, its main revenue streams, and the main markets it will operate in.

Required: (a) Explain if Donaldson should be considered the acquirer of Armstrong plc

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting For Decision Making And Control

Authors: Jerold Zimmerman

10th International Edition

1260565475, 9781260565478

More Books

Students also viewed these Accounting questions

Question

Find trigonometric notation. -32 - 32i

Answered: 1 week ago

Question

b. What is the persons job title?

Answered: 1 week ago