IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

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Wiley lFRS: Practicallmplementation Guide and Workbook

should be placed on the purchase consideration and net assets of Coa l as at the date of acquisition? (a) Purchase consideration $10 million, net as– set value $7 million. (b) Purchase consideration $ 11 million, net as– set value $7.5 million. (c) Purchase consideration $9 million, net asset value $7.5 million. (d) Purchase consideration $11 million, net as- set value $7 million. Answer: (b) 15. Mask, a private limited company, has arranged for Man, a public limited company, to acquire it as a means of obtaining a stock exchange listing. Man issues 15 million shares to acquire the whole of the share capital of Mask (6 million shares). The fair value of the net assets of Mask and Man are $30 mil– lion and $18 million respectively. The fair value of each of the shares of Mask is $6 and the quoted mar– ket price of Man' s shares is $2. The share capital of Man is 25 million shares after the acquisition. Calcu– late the value of goodwill in the above acquisition. Answer: (d) Cost of acquisition (Mask's shareholders own 60% of equity of Man) In order for 40 % of Mask's shar es to be owned by shareholders of Man, Mask needs to issue 4 million sha res. Therefore, cost of acquisition is 4 million x $6 each Fair value of assets of Man Goodwill $24 million ($18 million) $6 million (a) $ 16 million. (b) $ 12 million . (c) $10 million. (d) $6 million.