Xin Limited paid $12 000 for 75% of the shares in Yan Limited. At the date of acquisition Yan Limited had equity as follows:
Share capital $10 000
Retained earnings $5 000
Other reserves $3 000
All of Yan Limited's assets and liabilities were recorded at fair value. The fair value of identifiable net assets acquired by Xin Limited amounted to:
A) $9 750.
B) $12 000.
C) $13 500.
D) $18 000.

Question

Quizplus · Accepted Answer

The identifiable net assets acquired by Xin Limited are calculated as follows:
Fair value of Yan Limited's equity = $10,000 + $5,000 + $3,000 = $18,000
75% of Yan Limited's equity = 0.75 x $18,000 = $13,500
Therefore, the answer is C.

Xin Limited Paid $12 000 for 75% of the Shares