Question

1 H Ltd acquired all the identifiable assets and liabilities of F Ltd at fair value. As part of consideration, H Ltd is to provide sufficient cash to allow F Ltd to repay $8500 outstanding debts and liquidation expenses of $800. H Ltd will also pay 25 000 ordinary shares in H Ltd at $1.5 each. Cost of issuing these shares is $550. The purchase consideration paid by H Ltd is:

	a.	$46,800
	b.	$47,350
	c.	$46,000
	d.	$46,550

2

Which of the following statements is not true?

	a.	An impairment loss recognised for Goodwill shall not be reversed in a subsequent period.
	b.	A cash generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other group of assets.
	c.	An impairment loss shall be recognised immediately in profit or loss, unless the asset is carried at revalued amount.
	d.	The recoverable amount of an asset or a cash generating unit is the lower of: its fair value less costs of disposal its value in use

Answer 1

1) consideration paid = $46,800

Particulars	Amount
Cash	$    9,300.00
Shares	$ 37,500.00
	$ 46,800.00

Cost of issuing these shares i.e $550 will be an expense for H lts. so it will not be considered as a part of consideration.

2)

d) is Not True because: Recoverable amount is the GREATER of an asset's fair value less costs to sell, or its value in use. Value in use refers to the present value of future cash flows expected to be derived from an asset