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Homework answers / question archive / X Ltd acquired 60% of the ordinary shares in Y Ltd on 1/1/2019 with cash payment of 800,000$, share exchange of 1 share for every 3 shares acquired in Y Ltd

X Ltd acquired 60% of the ordinary shares in Y Ltd on 1/1/2019 with cash payment of 800,000$, share exchange of 1 share for every 3 shares acquired in Y Ltd

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X Ltd acquired 60% of the ordinary shares in Y Ltd on 1/1/2019 with cash payment of 800,000$, share exchange of 1 share for every 3 shares acquired in Y Ltd. The fair value of X Ltd's shares is 1.50$ on acquistion date. The contingent consideration of 1,100,000$ in the event net profit of Y Ltd increase by 15% or more for the year 2019. Cost of capital is estimated at 10% and total ordinary shars issued by Y Ltd is 500,000 units.

Calculate the consideration transferred for purchase of ordinary shares of Y Ltd.

a. 1,950,000$

b. 2,250,000$

c. 2,050,000$

d. 2,350,000$

Option 1

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