Question
The Parent company acquires all issued capital of the subsidiary company for a consideration of $1000000 cash and 800000 shares each valued at $1.25. The
The Parent company acquires all issued capital of the subsidiary company for a consideration of $1000000 cash and 800000 shares each valued at $1.25. The summary statement of financial position of the subsidiary company immediately following the acquisition is:
Fair value of assets acquired $2640000Fair value of liabilities acquired $720000Total shareholders' equity of the subsidiary company $800000Retained earnings of the subsidiary company $1120000
Required:
(i) Pass the necessary journal entry to record the acquisition (3 marks)
(ii) Determine the amount of goodwill (or bargain purchase) arising out of the
acquisition. (2 marks)
(iii) Pass the necessary consolidation entry to eliminate the subsidiary by the
parent company. (3 marks)
(iii) Determine the amount of goodwill (or bargain purchase) arising out of the
acquisition if the purchase consideration paid was $1000000 cash and 400000
shares each valued at $1.25. (2 marks)
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