ACCA F3 Consolidated Goodwill 3

Tempo Co acquired 100% of the equity share capital of Lento Co. This consisted of 40,000 shares of $0.50 each, It paid for the acquired by issuing 40,000 new shares of $1 each inTempo Co and exchanging three new shares in Tempo Co for every 2 shares in Lento Co.

The market value of Tempo Co shares at the time of acquistion was $6 per share. The fair value of the net assets acquired in Lento Co was $51,000.

What was the goodwill arising on the acquisition of the shares in Lento Co by Tempo Co?

Suggested solutions:

	$
Consideration for the acquisition	240,000
Net Assets taken over	( 51,000)
Goodwill	189,000

Working for consideration

Shares X Market price

=40,000 X 6

=$240,000

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