On January 1, 2022, Oat Corporation (a publicly-traded Canadian corporation) purchased 75% of the outstanding common shares of Barley Corp. at a price of 2,250,000. On that date, the fair market value of Barleys assets was the same as book value with the exception of equipment, which had a fair value 195,000 in excess of book value and an estimated remaining useful life of 5 years.

The balance sheet of Barley Corp. on the date of acquisition is presented below:

Assets:

Cash $ 52,600

Accounts receivable 84,300

Inventory 625,300

Land 1,560,000

Plant and Equipment(net) 1,935,450

Total assets $ 4,257,650

Liabilities and shareholders equity

Current payables $ 57,250

Long-term liabilities 1,000,000

Future income taxes 300,400

Common shares, no par value 1,100,000

Retained earnings 1,800,000

Total liabilities and Shareholders equity $ 4,257,650

REQUIRED:

1. Calculate the acquisition differential and goodwill generated from Oats acquisition of Barley Corp. common shares.

Explain how Oat is required to account for the goodwill calculated in (a), according to IFRS accounting rules.