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Has any goodwill been acquired

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Reference no: EM133016462

Question - ABC Ltd acquires 100 per cent of RedCarpet Ltd on 1 July 2021. ABC Ltd pays the shareholders of RedCarpet Ltd the following consideration:

Cash 35,000

Plant and equipment fair value $125,000; carrying amount in the books of ABC Ltd $85,000

Land fair value $150,000; carrying amount in the books of ABC Ltd $100,000

There are also legal fees of $95 000 involved in acquiring RedCarpet Ltd.

On 1 July 2021 RedCarpet Ltd's statement of financial position shows total assets of $300,000 and liabilities of $150 000. The fair value of the assets is $400,000.

Required - Has any goodwill been acquired and, if so, how much? And discuss the potential for including associated legal fees into the cost of acquiring RedCarpet using appropriate accounting standard.

Reference no: EM133016462

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