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Compute the amount of goodwill acquired by AA Limited

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Question - AA Limited acquired 90% of the share capital and reserves of BB Limited for $170,000. Share capital was $100 000 and reserves amounted to $60 000. All assets and liabilities were recorded at fair value except equipment which was recorded at $30 000 below fair value. The company tax rate was 30%. The partial goodwill method is adopted by the group. Compute the amount of goodwill acquired by AA Limited in this business combination?

a. $13 000

b. $2 800

c. $5 300

d. $7 100

e. $5 000

Reference no: EM132544693

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