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Question 14 Not yet answered Marked out of 2 p Flag question Broom acquired 90% of the ordinary shares of Handle for €250m on 31 December 20x4 when its assets were as follows: Book Fair Value value Em Cm Land and buildings 24 80 Vehicles 52 46 Stock 70 60 54 54 Debtors 20 20 Creditors The goodwill on acquisition of Handle is: Select one
Question 14 Not yet answered Marked out of 2 p Flag question Broom acquired 90% of the ordinary shares of Handle for €250m on 31 December 20x4 when its assets were as follows: Book Fair Value value Em Cm Land and buildings 24 80 Vehicles 52 46 Stock 70 60 54 54 Debtors 20 20 Creditors The goodwill on acquisition of Handle is: Select one .
0 3 Debtors 54 54 Creditors 20 20 The goodwill on acquisition of Handle is: Select one: O a. €52m O b. 630m c. €88m d. €16m Previous page Next page hottempt 1734526cmid=46106346page.
Expert Solution
Goodwill = Consideration paid to acquire interest – Fair value of the share of net identifiable assets
Here,
Consideration paid for acquiring 90% share = 250mn pounds
Fair value of total net identifiable assets of the Company = Fair values of (Land and buildings + Vehicles + Stock + Debtors) – Fair value of creditors
= 80mn + 46 mn + 60mn + 54mn – 20 mn
220mn pounds
90% share of net identifiable assets = 90% * 220 mn pounds
= 198 mn pounds
Goodwill = 250mn pounds – 198 mn pounds
= 52 mn pounds
Therefore, correct answer is A.
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