Would the dividend payable by subsidiary entity valley ltd

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Reference no: EM133009837

Sunshine Ltd acquired 80% of the issued shares of Valley Ltd for $800,000 (Valley Ltd's owner's equity at the time of purchasing was $700,000 made up of share capital of $500,000 and retained earnings of $200,000). One of the liabilities of Valley Ltd was $50,000 for the dividend payable but not yet paid and our accountant informed me that the shares were acquired based on cum-dividend. In addition, one of the assets in the statement of financial position of Valley Ltd was $35,000 for goodwill.

Required

Problem 1: Having prepared the acquisition analysis as part of preparing the consolidated financial statements for Sunshine Ltd, can you explain how does the recorded goodwill of $35,000 by the subsidiary Valley Ltd affects the group's goodwill?

Problem 2: Would the dividend payable by the subsidiary entity Valley Ltd impact the acquisition analysis? Please explain?

Reference no: EM133009837

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