Xin Limited paid $12 000 for 75% of Yan Limited.At the date of acquisition Yan Limited had equity as follows:
-Share capital of $10 000
-Retained earnings of $5 000
-Other reserves of $3 000
All of Y Limited's assets and liabilities were recorded at fair value.The fair value of identifiable net assets acquired by X Limited amounted to:

Question

Quizplus · Accepted Answer

The identifiable net assets acquired by X Limited include 75% of the equity of Yan Limited. Therefore, the share capital and retained earnings need to be multiplied by 75%. Additionally, the fair value of other reserves needs to be added. This calculation is as follows: 
$10,000 x 0.75 + $5,000 x 0.75 + $3,000 = $7,500 + $3,750 + $3,000 = $13,500. Therefore, option C is the correct answer.

Xin Limited Paid $12 000 for 75% of Yan Limited