Answer FE12-FE15

using the information below Dunn Ltd. acquired 100% of the common share capital of Brad Ltd. on June 1, 2011. Brad's statement of financial position as at June 1, 2011, included common shares of $5.0 million and retained earnings of $23.4 million.

The following information regarding Brad as at June 1, 2011, is available:

Land with a net book value of $5.2 million and a fair value of $7.5 million.

Finished goods with a cost of $2.2 million and a fair value of $2.945 million.

Brad issued bonds 11 years ago. The bonds have a carrying value of $7.2 million and a fair value of $6.452 million.

Brad had an investment in a non-listed company on its statement of financial position at a cost of $2.4 million. Its fair value is estimated to be $3.015 million.

Brad owns an internally developed patent that is not reported on the statement of financial position. Its fair value is $0.3 million.

Dunn paid the following for Brad's shares:

Cash $11,200,000

Common shares 4 million shares with a market value of $5.20 each.

3% bonds $5 million (market value of $4.419 million)

FE12

Acquisition differential will be

a) 8,100

b) 8,115

c) 8,125

d) 8,019

FE13

Goodwill arising on this acquisition is

a) 3,354

b) 3,311

c) 4,708

d) 4,350

FE14

Allocation difference between FV and BV for inventory is (FV > BV)

a) 745

b) 2,945

c) 2,200

d) -745

FE15

Allocation difference between FV and BV for Investments (FV > BV)

a) -615

b) 2,400

c) 615

d) -2,400