XYZ Ltd acquired 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration: Cash 89,383 Plant and equipment fair value $319 225; carrying amount in the books of ABC Ltd $217 073 Land fair value $383 070; carrying amount in the books of ABC Ltd $1 021 520 There are also legal fees of $242 611 involved in acquiring Red-X Ltd. On 1 July 2021, Red-X Ltd’s statement of financial position shows total assets of $383 070 and liabilities of $383 070. The fair value of the assets is $1 021 520. Required: Has any goodwill been acquired, and, if so, how much? And discuss the potential for including associated legal fees into the cost of acquiring Red-X using appropriate accounting standards.
XYZ Ltd acquired 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration: Cash 89,383 Plant and equipment fair value $319 225; carrying amount in the books of ABC Ltd $217 073 Land fair value $383 070; carrying amount in the books of ABC Ltd $1 021 520 There are also legal fees of $242 611 involved in acquiring Red-X Ltd. On 1 July 2021, Red-X Ltd’s statement of financial position shows total assets of $383 070 and liabilities of $383 070. The fair value of the assets is $1 021 520. Required: Has any goodwill been acquired, and, if so, how much? And discuss the potential for including associated legal fees into the cost of acquiring Red-X using appropriate accounting standards.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 18E
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XYZ Ltd acquired 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration:
Cash
89,383
Plant and equipment
fair value $319 225; carrying amount in the books of ABC Ltd $217 073
Land
fair value $383 070; carrying amount in the books of ABC Ltd $1 021 520
There are also legal fees of $242 611 involved in acquiring Red-X Ltd.
On 1 July 2021, Red-X Ltd’s statement of financial position shows total assets of $383 070 and liabilities of $383 070. The fair value of the assets is $1 021 520.
Required:
Has any goodwill been acquired, and, if so, how much? And discuss the potential for including associated legal fees into the cost of acquiring Red-X using appropriate accounting standards.
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