Day: February 8, 2021

Y Ltd purchases the business of J Brown by issuing £1 shares at a premium of £0.20.

Y Ltd agrees to take over J Brown’s assets and liabilities at the date of the acquisition as follows.

Goodwill is valued at £10,000.

How many shares will J Brown receive from Y Ltd?

Select ONE answer:

1. 158,000
2. 175,000
3. 200,000
4. 210,000

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – (£150k + £75k – £5K – £20k + £10k) ==> £210k / £1.20
3. Not correct
4. Not correct

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