Question 1 (40 marks) Organic Power Limited ("Organic Power") is an organic food and drinks seller in Hong Kong. On 1 May 2023, it acquired control of a food retailer Evergreen Limited ("Evergreen") by acquiring 78% of equity shareholding in Evergreen. Organic Power has elected to measure the Non-Controlling Interest (" NCI) at fair value. The agreed consideration of the above acquisition consisted of the following terms: - $38 million in cash, payable on the acquisition date; - $12 million loan notes payable on the first anniversary of the acquisition (i.e. 1 May 2024) and contingent upon Evergreen achieving stated profits targets; - 1 share in Organic Power issued on the acquisition date for every 20 shares acquired in Evergreen. At the acquisition date, Evergreen's share capital amounted to 15 million shares with a carrying amount of $22 million and the company's reported reserves were $50.2 million. Additional information: 1. The quoted share price of Organic Power on 1 May 2023 was $18.5 and the fair value of a share in Evergreen, determined using an income based valuation technique was $16.2. 2. The financial information of Evergreen prepared as at the acquisition date included: - A balance of $600,000 due from Organic Power in respect of goods delivered. The balance was settled at acquisition and formed part of the cash paid by Organic Power on 1 May 2023. - A provision of $800,000 was estimated as at 31 December 2022 in respect of a legal case brought against Organic Power by a customer of Evergreen for a batch of defective products. On the acquisition date, legal advisers suggested that a more accurate measurement of the expected settlement was $850,000. The case was subsequently settled at $875,000 in September 2023. - A property with a carrying amount of $5.6 million. The property is currently used for industrial purposes and based on that use has an estimated market value of $7.2 million. Surveyors have advised Organic Power that the property would achieve $7.8 million if sold on the basis of conversion to 'warehouse apartments'. Required: (a) Calculate the total consideration transferred by Organic Power in the acquisition of Evergreen. Show your workings and explanation clearly. (b) Calculate goodwill arising on the acquisition of Evergreen by Organic Power on 1 May 2023 (the acquisition date). Explain the calculation of Evergreen's identifiable net assets at the acquisition date