Big Ltd has purchased 100 per cent of Little Ltd for a cash payment of $800,000.The additional costs to Big Ltd to complete the purchase were $3,000.An extract from the balance sheet for Little Ltd at the date of acquisition shows: Additional information:
The assets and liabilities of Little Ltd are stated at fair value except that:
Land and buildings have a fair value of $300,000
Accounts receivable have a fair value of $20,000
Little owns a licence that has not been recorded in the accounts.Its fair value is $150,000.
What is the amount of purchased goodwill,if any,that has been acquired by Big Ltd?

Question

Big Ltd has purchased 100 per cent of Little Ltd for a cash payment of $800,000.The additional costs to Big Ltd to complete the purchase were $3,000.An extract from the balance sheet for Little Ltd at the date of acquisition shows:  Additional information:
The assets and liabilities of Little Ltd are stated at fair value except that:
Land and buildings have a fair value of $300,000
Accounts receivable have a fair value of $20,000
Little owns a licence that has not been recorded in the accounts.Its fair value is $150,000.
What is the amount of purchased goodwill,if any,that has been acquired by Big Ltd?

Quizplus · Accepted Answer

The Answer of Big Ltd has purchased 100 per cent of Little Ltd for a cash payment of $800,000.The additional costs to Big Ltd to complete the purchase were $3,000.An extract from the balance sheet for Little Ltd at the date of acquisition shows:  Additional information:
The assets and liabilities of Little Ltd are stated at fair value except that:
Land and buildings have a fair value of $300,000
Accounts receivable have a fair value of $20,000
Little owns a licence that has not been recorded in the accounts.Its fair value is $150,000.
What is the amount of purchased goodwill,if any,that has been acquired by Big Ltd?

Big Ltd Has Purchased 100 Per Cent of Little Ltd