Is this consideration fair? explain why or why not

Reference no: EM133541938

Question: (ABC) acquired 100% of the 300,000 issued shares in (XYZ) on 1 July 2021.

The consideration provided to shareholders of XYZ consisted of $1.20 in cash plus 1 share in ABC for each share held. The fair value of the ABC shares on the date of acquisition was $1.50. At the date of acquisition the records of XYZ included the following information: Share Capital $300,000.00, General Reserve $30,000.00, Retained Earnings $410,000.00

All of the assets and liabilities in the records of XYZ were considered to be fairly valued at the acquisition date with the exception of Equipment. On the acquisition date the equipment, which originally cost $496,000, was three years old and had a carrying value of $310,000. The fair value was $400,000. The group will depreciate the equipment over the remaining five years of its original eight year life. Benefits are expected to be received evenly across that period. The expected residual value is zero.

a) Is this consideration fair? Explain why or why not

b) what journal entries need to be completed?

Reference no: EM133541938

Questions Cloud

What is the management of care definition on test plan : What percentage of the NCLEX licensure exam focuses on Management of Care? What is the Management of Care definition on the test plan?

What is meant by chaos is the goal in cyber warfare : What is meant by "Chaos is the Goal" in cyber warfare?

How to do this is in a double entry system : full payment of invoice dated November 26 in the amount of $24,050. How to do this is in a double entry system

Discuss how conduction and convection on surface of earth : Discuss how conduction and convection on the surface of the Earth could allow London to stay so warm compared to other places at the same latitude.

Is this consideration fair? explain why or why not : Is this consideration fair? Explain why or why not and what journal entries need to be completed?

Explain confidentiality-data integrity : What are some risks, threats, and vulnerabilities commonly found in the Workstation Domain that must be mitigated through a layered security strategy?

What does budget accuracy refer to : What does budget accuracy refer to? how costs compare to the estimated length of the project the exactness of the estimate your initial approximation of costs

The affordable care act : The Affordable Care Act {ACA) represents a political compromise by providing subsidies to purchase private insurance in regulated markets

How a ledger and posting help in the recording process : Indicate how a journal is used in the recording process and Explain how a ledger and posting help in the recording process

User Account

All Pages