On the acquisition date,the fair value of Slate's identifiable net assets was $750 000,which was represented by issued capital of $550 000 and retained earnings of $200 000.If Pristine Company paid $825 000 to acquire all of the issued shares of Slate,what amount of goodwill will be recognised by the group?
A) $200 000
B) $0
C) $75 000
D) $275 000

Question

Quizplus · Accepted Answer

Goodwill is calculated as the difference between the purchase consideration paid by the acquirer and the fair value of net assets acquired. In this case, Pristine Company paid $825,000 to acquire Slate, while the fair value of Slate's identifiable net assets was $750,000. Therefore, the goodwill recognized is $825,000 - $750,000 = $75,000.

On the Acquisition Date,the Fair Value of Slate's Identifiable Net