Rohit Ltd acquired 70% of the issued equity capital of Joe Ltd on1October 2015. At that date, Joe Ltd hadissued equity share capital of 4,000,000 shares of $1 each and a share premium of $2,000,000. In exchange for acquiring the shareholding in Joe Ltd, Rohit Ltd
issued three equity shares of $1 each for every five shares acquired.

At 1October 2015, the fair value of Rohit Ltd equity shares was $4.60 per share and the fair value of the non-controlling interest in Joey was $2,000,000.
Calculate the parents cost of investment in the subsidiary using the share exchange.

Answer rating: 100% (QA)

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