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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
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
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