Question On 1 July 20x3, A Ltd acquired all the assets and liabilities of B Lid. Details of B Ltd's assets and liabilities acquired by A Ltd are as follows: CA Plant & equipment 320,000 FV 325,000 261,000 250,000 30,000 Land Inventory Accounts receivable Accounts payable Bank overdraft 24,000 18,000 16,000 (35,000) (35,000) (55,000) (55,000) 522,000 Net assets 542,000 B Lid is currently being sued by a previous customer. The expected damages are $40,000. Lawyers estimate that there is a 30% chance of losing the case. B Lid has internally generated a trade mark with a Fair Value of $125,000 which it has not recognised in its accounts. Details of the consideration transferred are as follows: . Cash of $600,000, $300,000 to be paid on 1 July 20x3, with the balance due on 1 July 20x4. The incremental borrowing rate for A Ltd is 8% . 120,000 shares in A Lid were issued. The share price on 1 July 20x3 was $1.20 per share. This price represented a six-month high. Costs of issuing the shares was $1,000. . Due to doubts as to whether the share price would remain at or above the $1.20 level, A Lid agreed to supply cash to the value of any decrease in the share price below $1.20. This guarantee was valid for a period of 3 months (to 30 September 20x3). A Ltd believed that there was a 60% chance that the share price would remain at or above $1.20 until 30 September 20x3 (and a 40% chance that it would fall to $1.00) . Supply of a patent to B Lid. The fair value of the patent is $60,000. As the patent was internally generated it has not been recognised in A Lid's books. . Legal fees and associated costs relating to the acquisition totalled $5,000. Periods Rate per period 10% 11% 9% 8% 0.9174 0.9091 0.9009 0.9259 0.8417 0.8264 0.8116 0.8573 The fair value of the identifiable net assets is The amount of consideration transferred in relation to the guarantee is: The total amount of consideration transferred in relation to the cash is: The amount of goodwill or gain on bargain purchase is: