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Example: Cost of acquisition n

Example: Cost of acquisition n

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Determine cost of acquisition

Example: Cost of acqulsition Company P acquired 80% of the shares of Company S when the fair value of the net assets of S was Rs. 800,000. The purchase price was Rs. 300,000 in cash plus 10,000 new shares in Company P. The new shares were to be issued 1 month after the date of acquisition. The market value of P's shares at the date of acquisition was Rs.40 each. One month later the market value had increased to Rs.45. The costs of making the acquisition were Rs. 80,000.
Transcribed Image Text:Example: Cost of acqulsition Company P acquired 80% of the shares of Company S when the fair value of the net assets of S was Rs. 800,000. The purchase price was Rs. 300,000 in cash plus 10,000 new shares in Company P. The new shares were to be issued 1 month after the date of acquisition. The market value of P's shares at the date of acquisition was Rs.40 each. One month later the market value had increased to Rs.45. The costs of making the acquisition were Rs. 80,000.
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