On January 1, 2013, Crawford Ltd. acquired 25% of the shares of Rufus Ltd. for $69,375. At this date, the equity of Rufus Ltd. consisted of:$\begin{array}{lc}
\text { Share capital } & \$ 150,000 \
\text { Retained earnings } & 80,000
\end{array}$ At the acquisition date, all the identifiable assets and liabilities of Rufus Ltd. were recorded at fair value, except for plant for which the fair value was $20,000 greater than its carrying amount, and inventory whose fair value was $5,000 greater than its cost. The tax rate is 30%. The plant has a further 5-year life. The inventory was all sold by December 31, 2013. In the reporting period ending December 31, 2013, Rufus Ltd. reported a profit of $20,000.
The amount of goodwill arising from this transaction is:

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The Answer of On January 1, 2013, Crawford Ltd. acquired 25% of the shares of Rufus Ltd. for $69,375. At this date, the equity of Rufus Ltd. consisted of:$\begin{array}{lc}
\text { Share capital } & \$ 150,000 \
\text { Retained earnings } & 80,000
\end{array}$ At the acquisition date, all the identifiable assets and liabilities of Rufus Ltd. were recorded at fair value, except for plant for which the fair value was $20,000 greater than its carrying amount, and inventory whose fair value was $5,000 greater than its cost. The tax rate is 30%. The plant has a further 5-year life. The inventory was all sold by December 31, 2013. In the reporting period ending December 31, 2013, Rufus Ltd. reported a profit of $20,000.
The amount of goodwill arising from this transaction is:

On January 1, 2013, Crawford Ltd Share capital $150,000 Retained earnings 80,000\begin{array}{lc}\text { Share capital } & \$ 150,000 \\\text { Retained earnings } & 80,000\end{array} Share capital Retained earnings ​$150,00080,000​

On January 1, 2013, Crawford Ltd $\begin{array}{lc}\text { Share capital } & \$ 150,000 \\\text { Retained earnings } & 80,000\end{array}$