Hungry Limited acquired 100% of the share capital of Jane Limited for a purchase consideration of $320 000. At acquisition date, the net fair value of Jane Limited's assets, liabilities and contingent liabilities was $250 000 including goodwill with a carrying amount of $20 000. The company tax rate is 30%. The unrecorded amount of goodwill that must be recognised on the consolidation worksheet is:

Question

Quizplus · Accepted Answer

To calculate the unrecorded amount of goodwill, we need to use the formula: 
Purchase Consideration - Net Fair Value of Assets Acquired = Goodwill

So, in this case: 
$320,000 - $250,000 = $70,000

Therefore, the unrecorded amount of goodwill that must be recognised on the consolidation worksheet is $70,000.

Hungry Limited Acquired 100% of the Share Capital of Jane