On September 1,20X7,CanAir Limited Decided to Buy 100% of the Shares

question 1

Essay

On September 1,20X7,CanAir Limited decided to buy 100% of the shares outstanding of SkyAir Inc.for $1,215,000.Can Air will pay for this acquisition by cashing in all of its marketable securities and issuing share capital for the remaining amount.The balances showing on the statement of financial position for the two companies at August 31,20X7 are as follows:

After a review of the financial assets and liabilities,CanAir determines that some of the assets of SkyAir have fair values different from their carrying values.These items are listed below:
Capital assets - fair value is $1,350,000
Internet domain name - fair value is $55,000
Customer lists - fair value is $35,000
In addition,SkyAir has tax losses available for carryforward that have a fair value of $225,000 and it is probable that they will be realized in the future.
Required:
Determine the amount of goodwill that will be recorded on the business combination.
Prepare the consolidated statement of financial position as at September 1,20X7.

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Definitions:

Consensus

A general agreement or collective decision-making process without objections among a group of people.

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Comprehensive plans or sets of actions designed to achieve specific goals or solve particular problems.

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The characteristic way in which someone expresses themselves verbally and nonverbally, often influencing how effectively they interact with others.