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dfs bpp text help

taskeytaskey Font Of All KnowledgeRegistered Posts: 1,800
ok, question is

thatch ltd acquired 600 £1 ordinary shares in straw ltd for £4000 on 1 jan X2/ at that date the capital and reserves of straw ltd were

share capital (£1 ordinary shares) 1,000
retained earnings 5,000
= 6,000

calculate goodwill on acquisition.

now the answer given is

cost of investment 4,000
group share of net assets acquired (3,600) (60% x 6000)
= 400

my question is.... where does the 60% come from?

am i missing something?

Comments

  • BluewednesdayBluewednesday Font Of All Knowledge Registered Posts: 1,624
    60% is 600 of the 1000 shares i.e. the group's portion of the company
  • taskeytaskey Font Of All Knowledge Registered Posts: 1,800
    fab, thanks. on looking at it now i can see that.

    Tracy
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