Blue Sea Resort Ltd acquired all the shares in Scuba Ltd for $750 000.The fair value of the assets acquired was $1 000 000 and the fair value of the liabilities assumed was $300 000.The amount of goodwill acquired by Blue Sea Resort Ltd is:

Question

Quizplus · Accepted Answer

Goodwill is the difference between the fair value of the assets acquired and the fair value of the liabilities assumed. In this case, the fair value of the assets acquired ($1,000,000) minus the fair value of liabilities assumed ($300,000) is $700,000. However, Blue Sea Resort Ltd only paid $750,000 for the shares in Scuba Ltd, so the goodwill acquired is only $50,000 ($750,000 - $700,000).

Blue Sea Resort Ltd Acquired All the Shares in Scuba