On 1 February 2023, WAT Ltd issues shares with a fair value of $200 000 as consideration for the acquisition of a business division from ER Ltd. The recorded assets acquired were as follows. Records of ER Ltd Fair Value $50 000 $70 000 25 000 35 000 $75 000 $ 105 000 Warehouse Inventories Net assets The business sale agreement includes the existing customer contracts of ER Ltd. These contracts are not included in ER Ltd's accounting records and have a fair value of $80 000. What is the amount of goodwill that WAT Ltd will recognise for business combination?
On 1 February 2023, WAT Ltd issues shares with a fair value of $200 000 as consideration for the acquisition of a business division from ER Ltd. The recorded assets acquired were as follows. Records of ER Ltd Fair Value $50 000 $70 000 25 000 35 000 $75 000 $ 105 000 Warehouse Inventories Net assets The business sale agreement includes the existing customer contracts of ER Ltd. These contracts are not included in ER Ltd's accounting records and have a fair value of $80 000. What is the amount of goodwill that WAT Ltd will recognise for business combination?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![On 1 February 2023, WAT Ltd issues shares with a fair value of $200 000 as consideration for the acquisition
of a business division from ER Ltd. The recorded assets acquired were as follows.
Records of ER Ltd
Fair Value
$50 000
$70 000
25 000
35 000
$75 000
$ 105 000
Warehouse
Inventories
Net assets
The business sale agreement includes the existing customer contracts of ER Ltd. These contracts are not
included in ER Ltd's accounting records and have a fair value of $80 000.
What is the amount of goodwill that WAT Ltd will recognise for business combination?
O a. $15 000 [= $200 000-$185 000]
O b. $45 000 [= $200 000-$155 000]
Oc$95 000 [= $200 000 - $105 000]
Od. $125 000 [= $200 000 - $75 000]
4](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc7a7c291-6116-48d0-8dfb-2128ed51b462%2F945393d6-d605-463f-8b1c-90beb0633155%2Fdzr4gv_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On 1 February 2023, WAT Ltd issues shares with a fair value of $200 000 as consideration for the acquisition
of a business division from ER Ltd. The recorded assets acquired were as follows.
Records of ER Ltd
Fair Value
$50 000
$70 000
25 000
35 000
$75 000
$ 105 000
Warehouse
Inventories
Net assets
The business sale agreement includes the existing customer contracts of ER Ltd. These contracts are not
included in ER Ltd's accounting records and have a fair value of $80 000.
What is the amount of goodwill that WAT Ltd will recognise for business combination?
O a. $15 000 [= $200 000-$185 000]
O b. $45 000 [= $200 000-$155 000]
Oc$95 000 [= $200 000 - $105 000]
Od. $125 000 [= $200 000 - $75 000]
4
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