You are given the following information about Target Inc.: Identifiable assets: Carrying amount: $ 540,000 Fair value: $ 485,000 Identifiable Liabilities: Carrying amount: $ 150,000 Fair value: $ 190,000 The total number of shares issued by Target is 20,000, at an average market price of $23 per share. Consider two scenarios: 1) Shell Inc. is set up to acquire Target, and buys for cash 100% of the issued share capital of Target for $ 510,000. 2) Shell buys an 82% stake in Target, thus acquiring a majority interest. The price paid is now $425,000. Assume that the tax rate is 0, so that you can ignore any deferred tax considerations. REQUIRED: A) Calculate the value of goodwill at acquisition date for the two scenarios, using both the full and partial method of goodwill in scenario 2). B) Provide all of the consolidation entries at the date of acquisition (not only those related to the elimination of the investment).
You are given the following information about Target Inc.:
Identifiable assets:
Carrying amount: $ 540,000
Fair value: $ 485,000
Identifiable Liabilities:
Carrying amount: $ 150,000
Fair value: $ 190,000
The total number of shares issued by Target is 20,000, at an average market price of $23 per share.
Consider two scenarios:
1) Shell Inc. is set up to acquire Target, and buys for cash 100% of the issued share capital of Target for $ 510,000.
2) Shell buys an 82% stake in Target, thus acquiring a majority interest. The price paid is now $425,000.
Assume that the tax rate is 0, so that you can ignore any
REQUIRED:
A) Calculate the value of
B) Provide all of the consolidation entries at the date of acquisition (not only those related to the elimination of the investment).
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