White Ltd acquired the net assets of Black Ltd for $140 000.At the date of purchase the fair value the net assets acquired was:
$
Plant and equipment 110 000
Inventory 37 000
Bank overdraft (20 000)
The value of purchased goodwill recorded by White Ltd is:

Question

Quizplus · Accepted Answer

The purchase price of $140,000 is equal to the fair value of the net assets acquired, which is the sum of the plant and equipment ($110,000) and inventory ($37,000), minus the bank overdraft ($20,000). Therefore, there is no goodwill recorded in this transaction, making the answer D incorrect.

White Ltd Acquired the Net Assets of Black Ltd for $140