On 1/07/2022, Kit Kat limited acquired all the shares in Mars Litd, the shares came with the dividend attached (cum. div). Mars had recorded a $500,000 dividen payable liability. The consideration paid by Kit Kat was $6,400,000. Equity at that date is: Share capital: $3,000,000 General reserve: $635,000 Retained earnings: $1,800,000 All assets were recorded at fair value except for the following in the Carrying amount Fair value Inventory $620,000 $643,000 Land $1,800,000 $2,000,000 Plant (accum. deon of $1,750,000) $3,250,000 $3,575,000 Patent $740,000 $615,000 Kit Kat recognised a brand with a value of $220,000 for Mars. The patent had accumulated amortisation of $740,000 with a remaining useful life of 8 years at acquisition. 1) Determine the gain on bargain purchase or goodwill as at acquisition date.
On 1/07/2022, Kit Kat limited acquired all the shares in Mars Litd, the shares came with the dividend attached (cum. div). Mars had recorded a $500,000 dividen payable liability. The consideration paid by Kit Kat was $6,400,000. Equity at that date is: Share capital: $3,000,000 General reserve: $635,000 Retained earnings: $1,800,000 All assets were recorded at fair value except for the following in the Carrying amount Fair value Inventory $620,000 $643,000 Land $1,800,000 $2,000,000 Plant (accum. deon of $1,750,000) $3,250,000 $3,575,000 Patent $740,000 $615,000 Kit Kat recognised a brand with a value of $220,000 for Mars. The patent had accumulated amortisation of $740,000 with a remaining useful life of 8 years at acquisition. 1) Determine the gain on bargain purchase or goodwill as at acquisition date.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On 1/07/2022, Kit Kat limited acquired all the shares in Mars Litd, the shares came with the dividend attached (cum. div). Mars had recorded a $500,000 dividen payable liability. The consideration paid by Kit Kat was $6,400,000. Equity at that date is:
Share capital: $3,000,000
General reserve: $635,000
All assets were recorded at fair value except for the following in the
| Carrying amount | Fair value | |
| Inventory | $620,000 | $643,000 |
| Land | $1,800,000 | $2,000,000 |
| Plant (accum. deon of $1,750,000) | $3,250,000 | $3,575,000 |
| Patent | $740,000 | $615,000 |
Kit Kat recognised a brand with a value of $220,000 for Mars.
The patent had accumulated amortisation of $740,000 with a remaining useful life of 8 years at acquisition.
1) Determine the gain on bargain purchase or
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