P Ltd paid $169 600 for 80% of the shares of S Ltd on 1 July 2013. All identifiable assets and liabilities of the subsidiary were recorded at fair value, except for land for which the fair value was $10 000 greater than cost. The tax rate is 30%. The NCI in S Ltd was considered to have a fair value of $42 000 and the group applies the full goodwill method. At acquisition date, the equity of S Ltd consisted of:
Share capital $100 000
General reserve $60 000
Retained earnings $40 000
The control premium paid by P Ltd is:
A) $600
B) $1600
C) $3000
D) $4600

Question

Quizplus · Accepted Answer

The Answer of P Ltd paid $169 600 for 80% of the shares of S Ltd on 1 July 2013. All identifiable assets and liabilities of the subsidiary were recorded at fair value, except for land for which the fair value was $10 000 greater than cost. The tax rate is 30%. The NCI in S Ltd was considered to have a fair value of $42 000 and the group applies the full goodwill method. At acquisition date, the equity of S Ltd consisted of:
Share capital $100 000
General reserve $60 000
Retained earnings $40 000
The control premium paid by P Ltd is:
A) $600
B) $1600
C) $3000
D) $4600

P Ltd Paid $169 600 for 80% of the Shares