Arthur Ltd acquires all the equity of Martha Ltd for a cash payment of $3 000 000 on 30 June 2025. The statement of financial position of Martha Ltd at purchase date is: Particulars Amount ($000) Assets Cash 100 Accounts receivable 90 Equipment 2 300 Land 2 090 Total assets 4 580 Liabilities Accounts payable 85 Loans 1 000 Total liabilities 1 085 Shareholders' equity Share capital 2 500 Retained earnings 995 Total liabilities and shareholders' fund 4 580 Assuming the assets are at fair value, what is the goodwill or bargain purchase on consolidation? a. $1 580 000 bargain purchase b. $1 580 000 goodwill c. $500 000 goodwill d. $495 000 bargain purchase e. $510 000 goodwill
Arthur Ltd acquires all the equity of Martha Ltd for a cash payment of $3 000 000 on 30 June 2025. The statement of financial position of Martha Ltd at purchase date is: Particulars Amount ($000) Assets Cash 100 Accounts receivable 90 Equipment 2 300 Land 2 090 Total assets 4 580 Liabilities Accounts payable 85 Loans 1 000 Total liabilities 1 085 Shareholders' equity Share capital 2 500 Retained earnings 995 Total liabilities and shareholders' fund 4 580 Assuming the assets are at fair value, what is the goodwill or bargain purchase on consolidation? a. $1 580 000 bargain purchase b. $1 580 000 goodwill c. $500 000 goodwill d. $495 000 bargain purchase e. $510 000 goodwill
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Arthur Ltd acquires all the equity of Martha Ltd
for a cash payment of $3 000 000 on 30 June
2025. The statement of financial position of
Martha Ltd at purchase date is: Particulars
Amount ($000) Assets Cash 100 Accounts
receivable 90 Equipment 2 300 Land 2 090 Total
assets 4 580 Liabilities Accounts payable 85
Loans 1 000 Total liabilities 1 085 Shareholders'
equity Share capital 2 500 Retained earnings 995
Total liabilities and shareholders' fund 4 580
Assuming the assets are at fair value, what is the
goodwill or bargain purchase on consolidation?
a. $1 580 000 bargain purchase b. $1 580 000
goodwill c. $500 000 goodwill d. $495 000
bargain purchase e. $510 000 goodwill
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