PBN Ltd. (PBN) is an investment holding company. PBN together with its subsidiaries (the Group) offers...

 

Transcribed Image Text:

PBN Ltd. (PBN) is an investment holding company. PBN together with its subsidiaries (the Group) offers a comprehensive range of information and communications technology services to the enterprise and residential markets in Hong Kong. On 2 January 2022, a subsidiary of PBN acquired the entire shares of S-Cloud Ltd. (SCL). SCL primarily engages in the provision of cloud solutions services in Hong Kong. In its consolidated financial statements for the year ended 31 March 2022, the Group reported the SCL acquisition as follows: Consideration transferred (Note 1) Fair value of identifiable net assets acquired (Note 1 & 2) Goodwill (Note 1 & 3) Acquisition-related transaction costs Notes: 1. 2. 3. HK$ (in thousands) 42,823 9,888 32,935 1,757 The fair value of consideration transferred, identifiable net assets acquired, and goodwill arising from the SCL acquisition were determined provisionally on 31 March 2022, the end of fiscal year. The identifiable net assets recognized by the Group included SCL's unrecognized intangible assets: Required: Customer relationship of cloud solutions business, and ● Brand and trademark of cloud solutions business. The goodwill is attributable mainly to the skills and technical talent of SCL's work force and the synergies expected to be achieved from integrating SCL into the Group's existing telecommunication business. In accordance with Hong Kong Financial Reporting Standard 3 (Revised) Business Combinations, answer the following questions: (a) Regarding Note (1), why were the fair value of consideration transferred, identifiable net assets acquired, and goodwill determined provisionally on 31 March 2022, instead of the acquisition date, 2 January 2022? (4 marks) (b) Regarding Note (2), what criteria should be met to qualify for recognition of SCL's unrecognized intangible assets in the Group's consolidated financial statements? (2 marks) (c) Advise how the Group accounts for goodwill arising from the SCL acquisition. (6 marks) PBN Ltd. (PBN) is an investment holding company. PBN together with its subsidiaries (the Group) offers a comprehensive range of information and communications technology services to the enterprise and residential markets in Hong Kong. On 2 January 2022, a subsidiary of PBN acquired the entire shares of S-Cloud Ltd. (SCL). SCL primarily engages in the provision of cloud solutions services in Hong Kong. In its consolidated financial statements for the year ended 31 March 2022, the Group reported the SCL acquisition as follows: Consideration transferred (Note 1) Fair value of identifiable net assets acquired (Note 1 & 2) Goodwill (Note 1 & 3) Acquisition-related transaction costs Notes: 1. 2. 3. HK$ (in thousands) 42,823 9,888 32,935 1,757 The fair value of consideration transferred, identifiable net assets acquired, and goodwill arising from the SCL acquisition were determined provisionally on 31 March 2022, the end of fiscal year. The identifiable net assets recognized by the Group included SCL's unrecognized intangible assets: Required: Customer relationship of cloud solutions business, and ● Brand and trademark of cloud solutions business. The goodwill is attributable mainly to the skills and technical talent of SCL's work force and the synergies expected to be achieved from integrating SCL into the Group's existing telecommunication business. In accordance with Hong Kong Financial Reporting Standard 3 (Revised) Business Combinations, answer the following questions: (a) Regarding Note (1), why were the fair value of consideration transferred, identifiable net assets acquired, and goodwill determined provisionally on 31 March 2022, instead of the acquisition date, 2 January 2022? (4 marks) (b) Regarding Note (2), what criteria should be met to qualify for recognition of SCL's unrecognized intangible assets in the Group's consolidated financial statements? (2 marks) (c) Advise how the Group accounts for goodwill arising from the SCL acquisition. (6 marks)

Answer rating: 100% (QA)

a Regarding Note 1 the fair value of consideration transferred identifiable net assets acquired and ... View the full answer