Question: Question 2 (11 marks) XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd

Question 2 (11 marks)

XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration:

Cash

91 835

Plant and equipment

fair value $327 983;

carrying amount in the books of ABC Ltd $222 912

Land

fair value $393 579;

carrying amount in the books of ABC Ltd $262 386

There are also legal fees of $249 267 involved in acquiring Red-X Ltd.

On 1 July 2021 Red-X Ltds statement of financial position shows total assets of $393 579 and liabilities of $393 575. The fair value of the assets is $1 049 544.

Required:

Has any goodwill been acquired and, if so, how much? And discuss the potential for including associated legal fees into the cost of acquiring Red-X using appropriate accounting standard.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

3 3.33 points eBook Exercise 7-7 (Static) Transfer of Land LO 7-4 Paste Corporation owns 70 percent of Stick Corporation's voting common stock. On March 12, 20X2, Stick sold land it had purchased for...

Question 2 (7 marks) ABC Ltd acquires 100 per cent of RedCarpet Ltd on 1 July 2021. ABC Ltd pays the shareholders of RedCarpet Ltd the following consideration: Cash 35 000 Plant and equipment fair...

Question 2 (11 marks) XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration: Cash 91 835 Plant and equipment fair value...

Question 2 (11 marks) XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration: Cash 85 033 Plant and equipment fair value...

Question 2 (11 marks) XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration: Cash 98,723 Plant and equipment fair value...

XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration: Cash 79 100 Plant and equipment fair value $282 500; carrying amount...

ncial Accounting ACT204_Semester 1_2016 Other expenses Profit 2.85.32 111.837 1.4 14.1% Peters Retailers Pty Statement of financial Position compared with Industry Average as at 30 June 2016 Peters...

Question 2 (7 marks) XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration: Cash 79 100 Plant and equipment fair value $282...

Question 2 (7 marks) XYZ Ltd acquires 100 per cent of Red-X Ltd on 1 July 2021. XYZ Ltd pays the shareholders of Red-X Ltd the following consideration: Cash Plant and equipment Land 79 100 fair value...

The ACME Corporation is looking to give its shareholders a type of dividend without disrupting the cash flow options of the business? Discuss the different types of dividends that a corporation could...

Determine whether the improper integral sec 0 do converge or diverge. 1- tan 0 Hence evaluate the integral.

Todd purchased a rental house for $ 1 8 0 , 0 0 0 , with the land valued at $ 2 0 , 0 0 0 . Before making the house available for rent, he remodeled the bathroom, spending $ 3 , 0 0 0 on a new...

Divisional Income Statements The following data were summarized from the accounting records for Jersey Coast Construction Company for the year ended June 30, 20Y8: Cost of goods sold: Service...