P3.4 Fair Value of Consideration Transferred

A Co acquires a controlling interest in B Co. The following information relates to transactions occurring on or before the acquisition date, 1 July 20x0:

GROUP REPORTING II: APPLICATION OF THE $4,000,000 5,000,000 Cash payment to owners of B Co Loan payable to banks to finance the acquisition of B Co Fair value of shares issued to owners of B Co Book value of shares issued to owners of B Co. Cost of issuing equity... Deferred consideration, payable at the end of 5 years. Present value of deferred consideration 6,400,000 3,600,000 90,000 ho 8,000,000 iz value 6,268,209 eldsv9op1.000,000 Additional payment made by A Co if contingent event occurs Contingent event: Profit of B Co for year ending 31 Dec 20x1 Period for profit target.... 25,000 ldevEnue 65,000 > $5 million Year ending 31 Dec 20x1 31 Dec 20x1 stiqso 910.6 2pnimss beni 0.4 000.00AT2 BE2 Date of payment of contingent payment Roair Probability of profit of B Co > $5 million in 20x1 Probability of profit of B Co $5 million Year ending 31 Dec 20x1 31 Dec 20x1 stiqso 910.6 2pnimss beni 0.4 000.00AT2 BE2 Date of payment of contingent payment Roair Probability of profit of B Co > $5 million in 20x1 Probability of profit of B Co