Calculation of Goodwill - Choice of Accounting Treatment - Finance Assignment Help

Assignment Task :

PART 1 

Expander plc wishes to acquire a 70% stake in Target plc by purchasing 280 million of Target’s 400  million £1 ordinary shares. Target currently has retained earnings of £1,360 million and is not  expecting to issue any shares or pay any dividends in the immediate future. The purchase of Target  will be paid for through a combination of immediate and deferred cash payments. 

Expander will pay £5,000 million of cash at the date of acquisition, plus a further £2,000 million in  two years’ time.  

Target has some valuable brands, trade names and internet domain names. These are not currently  recognised in Target’s financial statements. The estimated fair value of these assets is £3,500 million  and these brands and domain names are estimated to have a useful life of approximately 8 years. 

Expander has not yet determined whether it should measure non-controlling interest in its  subsidiaries on the basis of a proportionate interest in the identifiable net assets of the subsidiary or  whether it should use the “full goodwill” method. The fair value of a 30% holding in Target is  estimated to be £2,500 million. 

Where appropriate you may assume a discount rate of 5% per annum. 

Required 

Explain the following for the board of Expander plc: 

a) Discuss whether the IASB should have permitted a choice of accounting treatment in IFRS 3.  

b) Explain how the use of estimates affects the calculation of goodwill, with specific reference  to faithful representation.  

c) Advise the board of Expander as to the appropriate accounting policy to adopt in respect of  measuring non-controlling interest at acquisition.  

Your answer should be illustrated by supporting calculations. 

PART 2 

PART 2 – Option A 

Financial information disclosed by firms can lead to capital markets’ reactions. Discuss several types  of voluntary information that has been shown to affect capital markets’ reactions, explaining: 

a) what types of information you find more relevant; 

b) how it has been shown to affect capital markets (both in terms of models used and the  positive/negative impact expected); and  

c) what other aspects/variables one needs to take into consideration (i.e., to control for) when  measuring the impact of disclosure.  

Examples from academic studies, professional reports and reputable financial press should be  included in your answer, to enrich your essay. 

PART 2 – Option B 

ESG (environmental, social, and governance) disclosures made by firms can lead to capital markets’  reactions. Discuss several types of ESG information that has been shown to affect capital markets’  reactions, explaining: 

a) what types (and/or specific items) of information you find more relevant;

b) what frameworks firms can follow (and how they differ); and  

c) how it has been shown to affect capital markets. 

This Finance Assignment has been solved by our Finance  Experts at My Uni Papers. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.

Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.