Calculate the value of goodwill

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a) Equipment construction contractor for a customer for an agreed price of Rs. 18,000. This has recently been completed at a cost of Rs. 16,800. It was been discovered that, in order to meet certain regulations, conversion with an extra cost of Rs. 4,200 will be required. The customer has accepted partial responsibility and agreed to meet half the extra cost. What price should the equipment be valued in the books of contractor? Please refer to paras of IAS-16 (Property Plant and Equipment) that deal with treatment of such transactions.

b) Latif Limited acquires 80% of the STG Limited's share capital in a share for share exchange, STG has 100,000 shares of Rs. 10 each. The consideration that Latif Limited gives to acquire STG Limited is by making a two for one share issue when the price of each Latif Limited share is Rs. 15. At the date of acquisition the fair value of net assets of Park is 2 million.

Required - Calculate the value of goodwill.

Reference no: EM132589128

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