Determine the goodwill calculation, Financial Accounting

 A company purchased 16 million shares (representing an 80% controlling interest) in another company on 1 July 2010. The terms of the purchase were as follows:   

  • 1 share in the parent for every 4 shares in the subsidiary
  • An immediate cash payment of $20.5 million
  • A payment of 50% of the company's average annual profit for the first two years to be settled three years after the acquisition date. On 1 July 2010, the expected value of this payment (excluding any adjustment for the time value of money) was $10.2 million

The subsidiary's shares were trading at $20.40 at the date of acquisition. The parent's shares were trading at $15.20.

As a result of additional information available since the acquisition, the expected value of the payment based on profit (excluding adjustment for the time value of money) was revised to $11.4 million at 31 December 2010.

An appropriate annual discount factor for this company to use where necessary is 8%.

Requirement

Determine the consideration transferred figure used in the goodwill calculation for inclusion in the consolidated financial statements for the year ended 31 December 2010.

1(m) On 1 December 2009, Panther, a public company acquired 70% of the ordinary share capital of Sabre, a private company. The functional currency of Panther is the $ and the functional currency of Sabre is the zet.

Panther paid $46 million for its investment in Sabre on 1 December 2009, when the net fair value of the identifiable assets acquired and liabilities assumed of Sabre were 26,400 million zets.

Given that Sabre is a private company, Panther decided to measure the non-controlling interests at acquisition at the proportionate share of the fair value of the identifiable net assets of Sabre.

An impairment test conducted at group level on the investment in Sabre at 31 December 2010 indicated impairment losses of 600 million zets (gross of non-controlling interests). No impairment loss adjustments had been necessary at the previous year end.

Relevant exchange rates were:

1 December 2009 $1 = 470 zets

31 December 2009 $1 = 478 zets

31 December 2010 $1 = 490 zets

Posted Date: 3/15/2013 3:03:38 AM | Location : United States







Related Discussions:- Determine the goodwill calculation, Assignment Help, Ask Question on Determine the goodwill calculation, Get Answer, Expert's Help, Determine the goodwill calculation Discussions

Write discussion on Determine the goodwill calculation
Your posts are moderated
Related Questions
BREACH OF TRUST Remedies available to beneficiary: Injunction, Personal action, Criminal liability. Defence of trusts: He may be relieved from liability if, in the opini

PROTECTION OF PROPERTY OF A DECEASED PERSON (a) No person may take possession of or dispose of or otherwise intermeddle with, any free property of a deceased person, unless he

Jackson Corporation's bonds have 12 years remaining to maturity. Interest is paid yearly, the bonds have a $1,000 par value, and the coupon interest rate is 10.5%. The bonds have a

Suppose Real Option Inc. has a product that generates the following cash flow. At t=1, the demand can be high or low with equal probability. If demand is high (low) the cash flo

Accounting Date In determining the accounting date of the trust, the trustees will consider the following: Date of death (accounts to anniversary of death); Fiscal y

We have discussed the computation of the future value in the previous sections; here let us work the process in opposite. Let us assume you have won a lottery ticket worth Rs. 1000

assets&what are the different type of asset

Assignments with the answer for tafe sa 4 edition. Question 11, page 76 and question 39, page 89

Wright Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $243,339, $313,087, and $415,174, respectively

You have just started work for Warren Co. as part of the controller's group involved in current financial reporting problems. Jane Henshaw, controller for Warren, is interested in