Description
please see the the attached photo and calculate the goodwill on the requirement of ifrs 3
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Explanation & Answer
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Valuation of goodwill
Goodwill=Price paid for the acquired Company-Fair value of net identifiable assets
Net identifiable assets=Fair value of identifiable Assets-Liabilities
Price paid for the acquired company/Consideration=100,000*90=OMR 9,000,000
OMR
OMR
Fair value of identifiable assets:
Plant and equipment
5,000,000
Debtors
2,040,000
Inventory
1,900,000
Brand name
60,000
Customer list
40,000
Pending order profit
400,000
Totals
9,440,000
Liabilities:
Lease rent
800,000
Creditors
1,000,000
Contingent consideration for managers
40,000
Total liabilities
(1,840,000)
Net identifiable assets
7,600,000
Goodwill=9,000,000-7,600,000= OMR1,400,000
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Impacts of IFRS 3 on Business ‘consolidation’
IFRS 3 Business Combinations describes the accounting when an acquirer gets control of
a business (e.g. a securing or merger). Such business combinations are represented utilizing the
'acquisition technique', which for the most part re...