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Question: lu nan limited acquired 80percent of the share capital and...

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Lu Nan Limited acquired 80% of the share capital and reserves of Hui Limited for $20 000. Share capital was $10 000 and reserves amounted to $6 000. All assets and liabilities were recorded at fair value except plant, which was recorded at $1 000 below fair value. The company tax rate was 30%. The partial goodwill method is adopted by the group.  The amount of goodwill acquired by Lu Nan Limited in this business combination was:

Select one:
a.

$4 000

b.

$6 640

c.

$7 200

d.

$13 360

 

 

 

 

On 1 June 2014 Archway Ltd, with financial year end of 30 June, purchased raw materials from a European supplier for €250 000. It paid for the materials on 31 July 2014. Relevant exchange rates were:

                                                                                                       € = $1.00

1 June 2014                                                                             1.60

30 June 2014                                                                           1.61

31 July 2014                                                                             1.63

In respect of these items, what is the exchange gain or loss that should be included on 31 July 2014?


 

a.

 

$970          Gain


 

b.

 

$5 000       Loss


 

c.

 

$1 905       Gain


 

d.

 

$2 876       Gain


 

 

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