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Determine fair value of the investment made by mega plc

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Reference no: EM132584069

a. Mega PLC acquired 60% ordinary shares of Buddy PLC on 31 March 2020 when Buddy's share capital and retained profit stood at Rs.50 million and Rs. 30 million respectively. Fair value of the non-controlling interest as at that date was Rs.36 million. The share capital of Buddy PLC represents 5 million ordinary shares. In order to settle the purchase consideration Mega PLC agreed to following arrangements.

  • To issue 2 shares of Mega PLC for each share acquired from Buddy PLC. The share price of Mega PLC at the date of acquisition was Rs.6.
  • To make an immediate cash payment of Rs 8 million
  • To make a final cash payment of Rs.11million on 31 March 2021 Company's cost of capital is 10%

Required,

Question 1. Fair value of the investment made by Mega PLC to acquire the 60% shares of Buddy PLC?

Question 2. Goodwill on acquisition.

Reference no: EM132584069

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