I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART G: PREPARING SIMPLE CONSOLIDATED FINANCIAL STATEMENTS 

 

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2.4.1 Example: consideration in the form of shares 

P Co has acquired all of the share capital of S Co (12,000 $1 shares) by issuing 5 of its own $1 shares 

for every 4 shares in S Co. The market value of P Co's shares was $6 at the date of acquisition. The fair 

value of the net assets of S Co at the date of acquisition was $75,000.  

The fair value of the consideration transferred for the acquisition is: 

 

$ 

12,000  5/4  $6 

90,000 

This is credited to the share capital and share premium of P Co as follows.

 

 

 Dr 

 Cr 

 

$      

$      

Investment in subsidiary 

 90,000 

 

Share capital ($12,000  5/4) 

 

 15,000 

Share premium ($12,000  5/4  5) 

 

 75,000 

Goodwill on acquisition is calculated in the usual way as follows. 

 

 

 

 $  

Fair value of consideration transferred 

 

90,000 

Less net acquisition-date fair value of identifiable assets acquired and liabilities assumed  

 (75,000) 

Goodwill 

 

  15,000