Jabba Ltd Acquired a 70 Per Cent Interest in Han

question 10

Multiple Choice

Jabba Ltd acquired a 70 per cent interest in Han Ltd on 30 June 2012 for $2,000,000.On the same date,Han Ltd acquired a 60 per cent interest in Leia Ltd for a cash consideration of $1,600,000.The purchase price represents the fair value of consideration transferred for both investments The share capital and retained earnings at the date of acquisition are as follows:
What is the non-controlling interest in Han Ltd and Leai Ltd,respectively on the date of acquisition using the partial goodwill method (round to the nearest dollar) ?

• A) $780,000; $960,000;
• B) $857,143; $1,066,667;
• C) $1,820,000; $1,440,000
• D) $2,000,000; $1,600,000;
• E) $2,857,143; $2,666,667.

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Definitions:

Real Interest Rate

The inflation-adjusted interest rate, representing the actual borrowing cost and the genuine earnings for savers.

Real Value

The worth of a good or service adjusted for inflation, showing its true purchasing power.

Output

The amount of goods or services produced by a company, country, or economic system within a certain period.

Inflation Tax

An implicit tax that results from the erosion of purchasing power due to inflation, effectively reducing the real value of money held by the public.