Kit acquired 1600,000 shares of spoon 3 years ago when the Retained earnings of spoon...
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Kit acquired 1600,000 shares of spoon 3 years ago when the Retained earnings of spoon stood at $ 750,000. Pot paid an initial cash consideration of $ 3m, made a share exchange of 3 shares for every 5 shares received from spoon and promised to pay a further $1.5m in 4years time. The market value of Pots shares at the time of acquisition stood at $2m and that of Spoon was at $1.2. The current interest rate is 10%.
Below are the financial statements of Pot and Spoon as at 30 June 20X9
Statement of financial position of Pot and spoon as at 30 June 20X9
kit
Spoon
$000
$000
NON CURENT ASSETS
Property plant and Equipment
2,800
3,400
Investments
3,600
Current Assets
1,500
750
Total assets
7,900
4,150
Share capital
3,500
2,000
share premium
1,400
500
retained earnings
1,800
1,200
6,700
3,700
Non-current Liabilities
800
300
Current liabilities
400
150
Total Equity & Liabilities
7,900
4,150
Statements of profit or loss for the year ended 30 June 20X9
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