ACCA FR · Chapter 12 · Question 2 of 13
Puma Co bought 80% of Saker Co's equity shares, paying $5,000,000 in cash and issuing 1 million of its own $1 shares, which had a market value of $2.50 each. At acquisition, the non-controlling interest had a fair value of $1,600,000 and Saker Co's identifiable net assets had a fair value of $7,200,000. NCI is measured at fair value. What is the goodwill on acquisition?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $1,900,000
Explanation
Consideration = $5,000,000 + (1m x $2.50) = $7,500,000. Goodwill = consideration $7,500,000 + NCI at fair value $1,600,000 - net assets $7,200,000 = $1,900,000.
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