(5 MARKS)

AAA acquired 100% of BBB Inc. on January 1, 2018.On that date, BBB's common shares and retained earnings were worth $90,000 and $60,000 respectively. On the date of acquisition, the Fair Value equaled book value for BBB's assets, except for Land.The Fair value of Land was $30,000 greater than book value.

The value of "AAA's Investment in BBB Account" as of December 31, 2019 was $225,000.

Other information:

• During 2018, BBB's recorded net income loss from it's stand-alone Income statement was $7,000).
• During 2018, BBB declared a dividend of $3,500
• During 2019, BBB's recorded net income from it's stand-alone Income statement was $31,000
• During 2019, BBB declared a dividend of $9,000.
• Also, during 2019, it was professionally judged that there was a goodwill impairment of $1,000, which needs to be reflected on the consolidated income statement.

Required:

a)Calculate the initiate purchase price that AAA paid for BBB on January 1, 2018 (4 marks)

b)What was the goodwill on the date of acquisition? (1 mark)