ABC Ltd acquires 100 per cent of RedCarpet Ltd on 1 July 2021. ABC Ltd pays the shareholders of RedCarpet Ltd the following consideration: Cash35 000Plant and equipmentfair value $125 000; carrying amount in the books of ABC Ltd $85 000Landfair value $150 000; carrying amount in the books of ABC Ltd $100 000 There are also legal fees of $95 000 involved in acquiring RedCarpet Ltd.On 1 July 2021 RedCarpet Ltd’s statement of financial position shows total assets of $300 000 and liabilities of $150 000. The fair value of the assets is $400 000. Required: Has any goodwill been acquired and, if so, how much?

Particulars Amount Cash $35,000 Fair value of P&M given $125,000 Fair value of Land given…

Answered: ABC Ltd acquires 100 per cent of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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ABC Ltd acquires 100 per cent of RedCarpet Ltd on 1 July 2021. ABC Ltd pays the shareholders of RedCarpet Ltd the following consideration:

Cash	35 000
Plant and equipment	fair value $125 000; carrying amount in the books of ABC Ltd $85 000
Land	fair value $150 000; carrying amount in the books of ABC Ltd $100 000

There are also legal fees of $95 000 involved in acquiring RedCarpet Ltd.

On 1 July 2021 RedCarpet Ltd’s statement of financial position shows total assets of $300 000 and liabilities of $150 000. The fair value of the assets is $400 000.

Required:

Has any goodwill been acquired and, if so, how much?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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