HI5020 Corporate Accounting - Assessment Task 2

Question 2 Week 8 (7 marks)

The P Ltd acquires all issued capital of the S Ltd for a consideration of $1,000,000 cash and 800,000 shares each valued at $1.50. The summary statement of the financial position of the subsidiary company immediately following the acquisition is:

1. Pass the necessary journal entry to record the acquisition (2 marks)
2. Determine the amount of goodwill (or bargain purchase) arising out of the acquisition (2 marks)
3. Pass the necessary consolidation entry to eliminate the subsidiary by the parent company (2 marks)
4. Determine the amount of goodwill (or bargain purchase) arising out of the acquisition if the purchase
   consideration paid was $1,000,000 cash and 400,000 shares each valued at $1.50 (1 marks)