Stairwell Limited Acquired 100% of the Share Capital of Bannister

Stairwell Limited acquired 100% of the share capital of Bannister Limited for $237 500. Bannister had total shareholder's equity of $200 000. The book values of Bannister Limited's assets were: buildings $100 000, machinery $120 000. The fair values of these assets were: buildings $120 000, machinery $125 000. The tax rate is 30%. The acquisition analysis will determine:

A) a goodwill of $37 500.
B) a goodwill of $20 000.
C) a gain on bargain purchase of $12 500.
D) a gain on bargain purchase of $37 500.