Page 276 - F2 Integrated Workbook STUDENT 2019
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Chapter 12
Example 12.1
Birdie has invested in 60% of Eagle’s 5,000 $1 equity shares. Birdie paid
$2,500 cash consideration and issued 1 share for every 5 shares acquired. At
the date of acquisition, the market value of a Birdie share was $3.25.
Birdie agreed to pay $1,500 cash 2 years after acquisition. A further $1,500
cash will be paid contingent upon whether Eagle achieves revenue growth of
10% in 2 years. The fair value of this contingent consideration was deemed to
be $500.
It is group policy to measure NCI at fair value at the date of acquisition. The fair
value of the NCI at acquisition was $5,000 and the fair value of Eagle’s net
assets was $7,500.
Legal and professional fees incurred in relation to the acquisition were $1,000.
Assume a discount rate of 5%.
Required:
Calculate the goodwill arising on the acquisition of Eagle.
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