Pop and Mom Ltd bought 120,000 of the 200,000 issued ordinary 1 shares of Sonny Ltd for

Question:

Pop and Mom Ltd bought 120,000 of the 200,000 issued ordinary £1 shares of Sonny Ltd for

£300,000 on 31 July 2004. Sonny Ltd financial statements are drawn up annually to 31 December.

The balance sheet of Sonny Ltd on 31 December 2003 showed a balance of retained profits of

£62,000. The income statement of Sonny Ltd for the year ending 31 December 2004 showed a profit of £69,000. No other reserves appear in either balance sheet. Calculate the figure for the goodwill to be shown in the consolidated balance sheet as at 31 December 2004.

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