Acca financial Accounting (FA) Study Text ac ca (FA)

Illustration 6 – Fair value of consideration paid 

 

Hoe acquired a 75% interest in the equity share capital of Spade on 

1 January 20X6. The consideration consisted of an immediate cash 

payment of $1.80 per share acquired plus Hoe agreed to issue 2 shares 

in exchange for every 3 acquired. At the date of acquisition, Spade had 

2 million equity shares of $1 nominal value each in issue. The market or 

fair value of a $1 Hoe share at 1 January 20X6 was $3.  

Calculate the fair value of consideration paid by Hoe to acquire 

control of Spade and state the accounting entries required to 

account for the increase in share capital and share premium.  

 

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Consolidated statement of financial position  

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