For the year ended June 30 20X6,the following financial statements were prepared for the two companies Arkle Ltd and Red Rum Ltd (amounts in thousands).At that date,the net assets of Red Rum Ltd approximated their fair value. Balance Sheets as at June 30 20X6
Income Statements for the Year ended June 30 20X6
Statements of Movements in Retained Earnings Year ended June 30 20X6
On July 1 20X5,Arkle Ltd acquired all of the share capital for $2,250,000 cash.Immediately subsequent to acquisition,Red Rum Ltd paid a dividend of $250,000 out of retained earnings at July 1 20X5.The goodwill paid on the investment was:
A) $850,000
B) $750,000
C) $600,000
D) None of the above.

Question

For the year ended June 30 20X6,the following financial statements were prepared for the two companies Arkle Ltd and Red Rum Ltd (amounts in thousands).At that date,the net assets of Red Rum Ltd approximated their fair value. Balance Sheets as at June 30 20X6
 Income Statements for the Year ended June 30 20X6
 Statements of Movements in Retained Earnings Year ended June 30 20X6
 On July 1 20X5,Arkle Ltd acquired all of the share capital for $2,250,000 cash.Immediately subsequent to acquisition,Red Rum Ltd paid a dividend of $250,000 out of retained earnings at July 1 20X5.The goodwill paid on the investment was:
A) $850,000 
B) $750,000 
C) $600,000 
D) None of the above.

Quizplus · Accepted Answer

The Answer of For the year ended June 30 20X6,the following financial statements were prepared for the two companies Arkle Ltd and Red Rum Ltd (amounts in thousands).At that date,the net assets of Red Rum Ltd approximated their fair value. Balance Sheets as at June 30 20X6
 Income Statements for the Year ended June 30 20X6
 Statements of Movements in Retained Earnings Year ended June 30 20X6
 On July 1 20X5,Arkle Ltd acquired all of the share capital for $2,250,000 cash.Immediately subsequent to acquisition,Red Rum Ltd paid a dividend of $250,000 out of retained earnings at July 1 20X5.The goodwill paid on the investment was:
A) $850,000 
B) $750,000 
C) $600,000 
D) None of the above.

For the Year Ended June 30 20X6,the Following Financial Statements