Calculate the cost of investment to be included on consolidation of accounts.\
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Joe Bloggs acquires 21 million £1 shares (80%) of the ordinary shares of Biggs Ltd by offering a share for share exchange of two shares for every three shares acquired in Biggs and a cash payment of £1 per share payable three years later. Joe Bloggs's shares have a nominal value of £1 and a current market value of £2. The cost of capital is 10% and £1 receivable in 3 years can be taken as £0.75.\\nRequired\\nCalculate the cost of investment to be included on consolidation of accounts.\\nQuestion 5Answer\\n\\na.\\n£29.75m\\n\\n\\nb.\\n£78.75m\\n\\n\\nc.\\n£43.75m\\n\\n\\nd.\\n£49m
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