This scenario is related to Question 4 and 5.

On 1 January 2016, Donald Ltd purchased 100% of the shares of Duck Ltd for $190,000. At that date, the equity of Duck Ltd was as follows:

Share capital $ 100,000 Retained earnings $ 40,000 Asset revaluation surplus $ 10,000

At 1 January 2016, the recorded amounts of Duck Ltd's assets and liabilities were equal to their fair values except plant and machinery. At that date, cost of plant and machinery was $120,000, accumulated depreciation- plant and machinery was $40,000 and fair value was $90,000. The plant and machinery still have 5 years remaining life.

Tax rate is 30%.

Question 4. Compute goodwill / gain on bargain purchase.

Select one:

A). $35,000

B). $33,000

C). $40,000

D). $30,000

Question 5. Assume the plant and machinery (net) reported by Donald Ltd and Duck Ltd as at Dec 31, 2018 were $250,000 and $200,000 respectively. Compute consolidated balance of plant and machinery (net) for the year ended Dec 31, 2018.

Select one:

A). $458,000

B). $420,000

C). $454,000

D). $460,000