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Papa acquired 100% of the equity share capital of Anak on 1 January 2020. 1 point A fair value exercise conducted at this date identified
Papa acquired 100% of the equity share capital of Anak on 1 January 2020. 1 point A fair value exercise conducted at this date identified two issues below. Both of these issues had been treated correctly in the separate financial statements of Anak at 1 January 2020. The purchase consideration paid by Papa had already been agreed and will not be adjusted for the above issues. What effect will these issues have on the calculation of the goodwill arising on the acquisition of Anak in the consolidated financial statements of Papa? Issue! - Anak owned the rights to a brand which it had developed internally. The fair value of the brand at 1 January 2020 was reliably measured at RM20,000. Issue 2 - Anak was defending a legal claim brought against it by a former employee. The fair value of the potential liability for damages payable was reliably measured at RM85,000 on 1 January 2020. Anak's legal team had advised that there was only a 30% chance that they would lose the court case. O Both issues will increase goodwill O Both issues will decrease goodwill Issue 1 will increase goodwill and issue 2 will have no effect on goodwill Issue 1 will decrease goodwill and issue 2 will increase goodwill
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