# R16 Q27 Can anyone explain how 10million has been calculated?

Answer to Q27 is 204 = 102 + 92 +10 .

Can you explain how 10 million has been calculated.

I’m just going from my notes as I don’t have access to the 2017 material.

If acquiring control depreciate for year is: 102m is parent, 92m is acquired, and 10m is for licenses = 204m.

The licenses have FV of 60m, 50% purchase @ 320 = 640 total net Assets - 580 (FV of Net Assets) = 60m, with 6 years remaining life = 60m/6 years = 10m which is amortized per year adjustment.

I hope that makes sense because that’s all I have written down for the question.

The consolidated statements will record the total amortization expense of the unrecorded license. To assess the total amortization expense of the unrecorded license, you need to calculate total fair value of the net assets of Boswell.

The first para of the question indicates that: Fair value=book value+license value. Using the acquisition price, total fair value of the net assets of Boswell is equal to 320/(.5)=640. Whereas, book value of the net assets of Boswell is equal to 580. The difference is 60, which is allocated to license. Its economic life is 6 years, so amortization expense per year is equal to 60/6=10.

Thanks Got it.