Discuss the potential for including associated legal fees

Assignment Help Accounting Basics

Reference no: EM132971856

Question: ABC Ltd acquires 100 per cent of RedCarpet Ltd on 1 July 2021. ABC Ltd pays the shareholders of RedCarpetLtd the following consideration:

Cash 35 000
Plant and equipment
fair value $125 000; carrying amount in the books of ABC Ltd $85 000
Land
fair value $150 000; carrying amount in the books of ABC Ltd $100 000

There are also legal fees of $95 000 involved in acquiring RedCarpet Ltd.

On 1 July 2021 RedCarpet Ltd's statement of financial position shows total assets of $300 000 and liabilities of $150 000. The fair value of the assets is $400 000.

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 RedCarpet using appropriate accounting standard.

Reference no: EM132971856

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