On 1 April 20X7 Root acquired 116 million of Branch's 145 million ordinary shares for an immediate cash payment of $210 million and issued at par one 10% $100 loan note for every 200 shares acquired. At the date of acquisition Branch owned a recently built property that was carried at its depreciated construction cost of $62 million. The fair value of this property at the date of acquisition was $82 million and it had an estimated remaining life of 20 years. Branch also had an internally-developed brand which was valued at the acquisition date at $25 million with a remaining life of 10 years. The inventory of Branch at 31 March 20X9 includes goods supplied by Root for a sale price of $56 million. Root adds a mark-up of 40% on cost to all sales. What is the amount of the unrealised profit arising from intragroup trading?
On 1 April 20X7 Root acquired 116 million of Branch's 145 million ordinary shares for an immediate cash payment
of $210 million and issued at par one 10% $100 loan note for every 200 shares acquired.
At the date of acquisition Branch owned a recently built property that was carried at its
of $62 million. The fair value of this property at the date of acquisition was $82 million and it had an estimated
remaining life of 20 years.
Branch also had an internally-developed brand which was valued at the acquisition date at $25 million with a
remaining life of 10 years.
The inventory of Branch at 31 March 20X9 includes goods supplied by Root for a sale price of $56 million. Root
adds a mark-up of 40% on cost to all sales.
What is the amount of the unrealised profit arising from intragroup trading?
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