Q1. (a)Ryder Co. is involved in developing new products and has spent the following amounts a) $12 million on acquiring patents to aid development of a new product b) Initial investigative phase of the project cost $ 5 million c) $8 million was spent subsequently out of which $5 million was spent on a functioning prototype and the remainder was other administrative costs d) $1 million was spent on marketing e) $ 0.5 million was spent on training of sales staff Explain how Ryder should account for each of the expenditure in its year end financial statements.

(b)Able Company paid $3,400,000 to acquire all of the ordinary shares of Cane Corporation, on June 30th 2019, which became a division of Able. Cane reported the following statement of financial position at the time of the acquisition: Non-current assets $2,700,000 Equity $2,500,000 Current assets 900,000 Non-current liabilities 500,000 Current liabilities 600,000 Total assets $3,600,000 Total equity and liabilities $3,600,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Cane was $2,800,000. 1) Explain the concept of goodwill and compute goodwill, if any, on June 30th, 2019. (3 marks) 2) If Able paid $ 2,600,000 to purchase Cane how will that be accounted for? (2 marks)