Chapter4Problem-6and7

Chapter4Problem-6and7 - Problem 6 Purchase price (300,000...

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Problem 6 Purchase price (300,000 $8.00) 2,400,000 Fair value of net assets 2,290,000 Favourable lease contract** 60,000 Goodwill 50,000 ** IFRS 3 requires favourable lease terms to be recognized at fair value as an identifiable asset in a business combination (par. B29 to B31). Note that the fact that the lease cannot be transferred or assigned does not affect the requirement to recognize it as an identifiable asset on acquisition as it still meets the contractual-legal criterion (i.e. the asset results from contractual or other legal rights (regardless of whether those rights are transferable or separable from the acquired enterprise or from other rights and obligations). D Ltd. Balance Sheet July 1, Year 5 Current assets (450,000 + 510,000) $ 960,000 Non-current assets (4,950,000 + 3,500,000) 8,450,000 Intangible asset – lease contract 60,000 Goodwill 50,000 $9,520,000 Current liabilities (600,000 + 800,000) $1,400,000 Long-term debt (1,100,000 + 920,000) 2,020,000 Common shares (2,500,000 + 2,400,000) 4,900,000 Retained earnings 1,200,000 $9,520,000
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Chapter4Problem-6and7 - Problem 6 Purchase price (300,000...

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