Hungry Limited acquired 100% of the share capital of Jane Limited for a purchase consideration of $320 000. At acquisition date, the net fair value of Jane Ltd's assets, liabilities and contingent liabilities was $250 000 including goodwill with a carrying amount of $20 000. The company tax rate is 30%. The unrecorded amount of goodwill that must be recognised on the consolidation worksheet is:

Question

Quizplus · Accepted Answer

The unrecorded amount of goodwill can be calculated as:
Purchase Consideration - Fair Value of Net Assets acquired
= $320,000 - $250,000
= $70,000
Since the carrying amount of goodwill is $20,000, the additional amount of goodwill that must be recognised on the consolidation worksheet is $70,000 - $20,000 = $50,000. Therefore, the correct answer is B.

Hungry Limited Acquired 100% of the Share Capital of Jane