XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration: Cash 91 835 Plant and fair value $327 983; equipment carrying amount in the books of ABC Ltd $222 912 Land fair value $393 579; carrying amount in the books of ABC Ltd $262 386 There are also legal fees of $249 267 involved in acquiring Red-X Ltd. On 1 July 2021 Red-X Ltd's statement of financial position shows total assets of $393 579 and liabilities of $393 575. The fair value of the assets is $1 049 544. 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 standard.
XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration: Cash 91 835 Plant and fair value $327 983; equipment carrying amount in the books of ABC Ltd $222 912 Land fair value $393 579; carrying amount in the books of ABC Ltd $262 386 There are also legal fees of $249 267 involved in acquiring Red-X Ltd. On 1 July 2021 Red-X Ltd's statement of financial position shows total assets of $393 579 and liabilities of $393 575. The fair value of the assets is $1 049 544. 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 standard.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:XYZ Ltd acquires 100 per cent of Red-X Ltd on 1
July 2021. XYZ Ltd pays the shareholders of
Red-X Ltd the following consideration:
Cash
91 835
Plant and
fair value $327 983;
equipment
carrying amount in the
books of ABC Ltd $222 912
Land
fair value $393 579;
carrying amount in the
books of ABC Ltd $262 386
There are also legal fees of $249 267 involved in
acquiring Red-X Ltd.
On 1 July 2021 Red-X Ltd's statement of financial
position shows total assets of $393 579 and
liabilities of $393 575. The fair value of the assets
is $1 049 544.
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 standard.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education