Subject = Issue in financial reporting

P.10.11 Eastern Management Lid acquired all the assets and liabilities of King Lid on 30 June 2017. The carrying amount and estimated fair value of assets and liabilities taken over are as follows. Carrying amount Fair value EA $ Accounts receivable 760 000 720 000 Inventory 1300 000 1440 000 Property, plant and equipment 1680 000 1560 000 Account payable 680 000 680 000 Provision for employee benefits 170 000 220 000 In addition, due diligence identified the existence of brand names that were valued by an expert at $500 000. The due diligence process also uncovered contingent liabilities that were reliably measured as $150 000. The price was $4 800 000 and costs of $100 000 were incurred in the purchase. Required a) Calculate the amount of goodwill that would be recorded in the books of Eastern Management Ltd following the acquisition of King Ltd. Show all workings. b) Outline the requirements of AASB 3 in relation to the subsequent measurement of goodwill. C) How would your answer differ in part (a) if Eastern Management Lid had paid $3M for King Ltd