Determine cost of acquisition Example: Cost of acqulsitionCompany P acquired 80% of the shares of Company S when the fair value of thenet assets of S was Rs. 800,000.The purchase price was Rs. 300,000 in cash plus 10,000 new shares in CompanyP.The new shares were to be issued 1 month after the date of acquisition.The market value of P's shares at the date of acquisition was Rs.40 each. Onemonth later the market value had increased to Rs.45.The costs of making the acquisition were Rs. 80,000.

Cost of acquistion is the cost of acquiring assets of the company . As…

Answered: Example: Cost of acquisition n

Business

Accounting

Example: Cost of acquisition n

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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Question

Determine cost of acquisition

Example: Cost of acqulsition
Company P acquired 80% of the shares of Company S when the fair value of the
net assets of S was Rs. 800,000.
The purchase price was Rs. 300,000 in cash plus 10,000 new shares in Company
P.
The new shares were to be issued 1 month after the date of acquisition.
The market value of P's shares at the date of acquisition was Rs.40 each. One
month later the market value had increased to Rs.45.
The costs of making the acquisition were Rs. 80,000.

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