Business Acquisitions and Mergers
When a business expands in size and is able to negotiate a lower interest rate on loans
financial economies of scale
True or false. When calculating profit on dissolution you use the new profit sharing ratio
False
When two businesses combine to become one
Merger
Two sole traders choose to merge into a limited company to attain this
limited liability
Non current asset NBV = 1953, purchase consideration is 2100. How much is added into the new sofp of the new companies statement of financial position
2100
When a bigger business buys out a smaller business
takeover
The extra value placed on the business above its fair capital value as an appreciation to the brand the previous owners have built
Goodwill
Capital account 5467, current account (1203), loss on dissolution (7465), Loan from this partner 4000. How much cash is owed to this partner on dissolution
799
Apple buying out a tin mining factory
vertical integration
True or false can goodwill be negative
True
Purchase consideration is $100. ABC limited offers the business 130 shares of $0.8. How much is the amount placed in share premium
Trick question there’s no share premium, the owner has to actually pay $4 more
Apple buys out huawei
horizontal integration