On 1 July 20X8 Berardo Ltd acquired 25% of the ordinary issued share capital of Ricky Ltd for €375 000. This investment gave rise to significant influence. The share capital and reserves of Ricky Ltd at 1 July 20X8 were:
$\begin{array}{ll}&€\
\text { Share capital } & 400,000 \
\text { General reserve } & 250,000 \
\text { Retained earnings } & 275,000\&925,000
\end{array}$ All the identifiable net assets of Ricky Ltd were stated at fair value at the date of acquisition except for a building whose carrying value was €50 000 less than the fair value. Goodwill arising on Berardo's acquisition of Ricky was:

Question

Quizplus · Accepted Answer

The fair value of Ricky Ltd's net assets is €975,000 (925,000 + 50,000). The carrying value of Berardo's investment is €375,000. Therefore, the goodwill arising on the acquisition is €135,000 (975,000 - 375,000).

On 1 July 20X8 Berardo Ltd Acquired 25% of the Ordinary