Brooks Ltd paid $680 000 for 80% of the shares of Samba Ltd on 1 July 2011.All identifiable assets and liabilities of Samba Ltd were recorded at fair value.The NCI in Samba Ltd was considered to have a fair value of $168 000.At the date of acquisition the equity of Samba Ltd was: $$\begin{array} { l c }
&\$\
\text { Share capital } & 400~000 \
\text { General reserve } & 240~000 \
\text { Retained earnings } & 180~000
\end{array}$$ Calculate the goodwill of Brooks Ltd.
A)$24 000
B)$4 000
C)$28 000
D)$140 000

Question

Brooks Ltd paid $680 000 for 80% of the shares of Samba Ltd on 1 July 2011.All identifiable assets and liabilities of Samba Ltd were recorded at fair value.The NCI in Samba Ltd was considered to have a fair value of $168 000.At the date of acquisition the equity of Samba Ltd was: $$\begin{array} { l c } 
&\$\
\text { Share capital } & 400~000 \
\text { General reserve } & 240~000 \
\text { Retained earnings } & 180~000
\end{array}$$ Calculate the goodwill of Brooks Ltd.
A)$24 000
B)$4 000
C)$28 000
D)$140 000

Quizplus · Accepted Answer

Goodwill = Consideration paid - (NCI + Fair value of identifiable net assets)= $680,000 - ($168,000 + $400,000 + $240,000 + $180,000)= $680,000 - $1,008,000= $24,000

Brooks Ltd Paid $680 000 for 80% of the Shares