- Record the worksheet journal entries that should be recognized for the Excess
ID: 2601805 • Letter: #
Question
- Record the worksheet journal entries that should be recognized for the Excess acquisition-date fair-value amortization identified in number 2 above Question 4 On 1 January 2008, Hornet plc acquired 30% of equity shares of Alton plc for S7,000. The fair value of net assets for Alton at this date was $20,000. Alton earned a profit of $2,500 for year ended 31/12/2008 and paid S 500 dividends. On 1 January 2009, Hornet acquired an extra 40% share of Alton for a further cash payment of $ 11,000. The fair value of identifiable net assets of Alton at 1 January 2009 was $30,000. Required 1- The book value for the investment in associate at 31 December 2008 is 2- The fair value for the investment in associate at 1 January 209 is 3- The gain/loss on re-measuring the previously held 30% share in Alton on the date Hornet gained control- 1 January 2009- is The amount of goodwill recognized on consolidation at the date Hornet gained control over Alton-1 January 2009-is 4-Explanation / Answer
The book value of investment in associate company is
Cost of investment :7,000
Add share in profit. : 2500*0.30= 750
Less dividend. : 500*.30=(150)
Book value of investment. : 7600
2. The Fair value of investment in the company is
Fair value of net assets: 30000
Share in net assets:30000*0.30=9,000
3. There will be profit of 1,400 =(9000-7600)
4. Amount recognized has good will is
Cost of investment minus share in net assets
Cost of investment = 7600+11000=18600
Share in net assets = 22000*.70 =15400
Goodwill = 3200
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