ABC Limited acquired 80% common shares of XYZ Corporation for $120,000. At the time of acquisition, XYZ Corporation reported $10,000 and $55,000 for its common share and retained earnings, respectively.

The fair value of the net identifiable assets was approximated to the fair value except the following:

• Inventory: book value was $55,000 and fair value was $75,000;
• Land: book value was $200,000 and fair value was $190,000; and
• Long-term debt: book value was $88,000 and fair value was $75,000.

ABC will use fair value enterprise method to value the non-controlling interest. What was the goodwill at the time of the acquisition? (3 marks)

Question 1Select one:

a.

$62,000

b.

$42,000

c.

$88,000

d.

$82,000