Question

Curiosity Ltd acquired all the issued share capital of Cat Ltd on 1 July 20X1. Cat Ltd’s shareholders’ equity at that date was as follows: 000s Paid up capital $4,500 General reserve $3,000 Asset revaluation reserve $500 Retained profits $1,500 At 1 July 20X1, Curiosity Ltd considered Cat Ltd had unrecorded licenses with a fair value of $1,500,000. What was the cost of acquisition (the fair value of the consideration paid) incurred by Curiosity Ltd, if $500,000 of consolidation goodwill from the business combination was recognised in the consolidated financial statements prepared on 1 July 20X1? Select one: $10,500,000 $10,000,000 $11,500,000 $9,000,000

Answer 1

Answer : $11,500,000

Statement showing Goodwill of the company...

$

Paid up share Capital 4,500,000

General Reserve 3,000,000

Asset revaluation reserve 500,000

Retain earning   1,500,000

Unrecorded licenses* 1,500,000

Networth of the company (Total)   11,000,000

Amount paid for Acquisition(b/f) 11,500,000

-----------------

Goodwill 500,000

* Licences is the assets for the company they are unrecorder therfore they considered in calculation of goodwill.

If they are recorded then they will not be considered...