Acquisition and Merger

Worked examples (10)

• 1Fair value of net assets (4 marks)
• 2Goodwill on acquisition (3 marks)
• 3Apply a fair-value adjustment (4 marks)
• 4Share premium on the consideration (4 marks)
• 5Check the consideration (5 marks)
• 6Consideration with debentures (5 marks)
• 7Goodwill from consideration breakdown (6 marks)
• 8Entries to record the acquisition (5 marks)
• 9Why purchased goodwill is recognised (4 marks)
• 10Bargain purchase (4 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style

Worked examples (10)

• 1What a merger involves (3 marks)
• 2Revalue a business (4 marks)
• 3Opening capital (4 marks)
• 4Two partners' opening capitals (5 marks)
• 5Revaluation gain to the right partner (4 marks)
• 6Goodwill raised and written off (6 marks)
• 7Goodwill write-off causing a transfer (6 marks)
• 8Check the capital total (4 marks)
• 9Why revalue before merging (4 marks)
• 10Why goodwill is brought in (4 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style

Worked examples (10)

• 1Equity after a share-financed acquisition (4 marks)
• 2Bank after cash consideration (3 marks)
• 3Combine assets at fair value (4 marks)
• 4Goodwill in the statement (3 marks)
• 5Partnership capital section (5 marks)
• 6Debentures as a liability (4 marks)
• 7Total assets after acquisition (6 marks)
• 8Check the statement balances (5 marks)
• 9Use fair value, not book (4 marks)
• 10Avoid double-counting (4 marks)

Model answers (10)

• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style
• ✓Model answer — 9706 Paper 3 style