Caloundra Ltd has all of its identifiable net assets recorded in its books at fair value.Bellvista Ltd acquired all of the issued share capital of Caloundra Ltd for $100 000.At the date of acquisition,the equity of Caloundra Ltd consisted of: $65 000 share capital and $20 000 retained earnings.The amount of goodwill acquired is:
A)$35 000
B)$15 000
C)$0
D)$80 000

Question

Quizplus · Accepted Answer

When Bellvista Ltd acquired all the issued share capital of Caloundra Ltd for $100 000, it paid $65 000 for the share capital and $20 000 for the retained earnings, which means that it paid $85 000 for the net assets. Since all the net assets of Caloundra Ltd were recorded at fair value, the amount paid by Bellvista Ltd was equal to the fair value of these assets.The amount of goodwill acquired is calculated by subtracting the fair value of the net assets acquired from the amount paid, which is $100 000 - $85 000 = $15 000. Therefore, the answer is B, $15 000.

Caloundra Ltd Has All of Its Identifiable Net Assets Recorded