S Ltd. has issued and subscribed capital of 100000 equity shares of ₹ 10 each. The current market price…
The gain on bargain purchase is ₹90,000 when non-controlling interest is measured at market value. The non-controlling interest is 30,000 shares × ₹22 = ₹6,60,000.…
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S Ltd. has issued and subscribed capital of 100000 equity shares of ₹ 10 each. The current market price per share is ₹ 22. H Ltd. acquires 70% of shares of S Ltd. at ₹ 16,00,000. The consideration is payable in cash. The fair value of identifiable net assets of S Ltd. is ₹ 23,50,000. Non-controlling interest is measured at fair value, based on the current market price. Then the amount of Goodwill/Gain on bargain purchase in the Consolidated Accounts will be
Answer and explanation
Correct answer A
The gain on bargain purchase is ₹90,000 when non-controlling interest is measured at market value. The non-controlling interest is 30,000 shares × ₹22 = ₹6,60,000. Consideration of ₹16,00,000 plus ₹6,60,000 totals ₹22,60,000, which is ₹90,000 below identifiable net assets of ₹23,50,000.
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West Bengal SET (WB SET)