On january... and solve these accounting question On January 1, 2007, A acquired a 20% shareholding in B at a cost of $40,000. OnJanuary 1, 2009, A acquired a further 40% shareholding in B at a cost of $150,000.At this time it was determined that the fair value of A's 20% shareholding in B was$50,000. Between January 1, 2007, and January 1, 2009, B made a profit of $30,000.Required:a. Calculate the cost of investment that will be used in computing goodwill.b. Calculate the goodwill arising from this transaction.c. Calculate the gain arising that will be recognized in the income statementassuming that A's 20% shareholding did NOT allow it to exercise significantinfluence over B.d. Calculate the gain arising that will be recognized in the income statementassuming that A's 20% shareholding did allow it to exercise significant influenceover B.

Step 1: Define GoodwillThe reason for the existence of goodwill includes a solid customer base,…

Answered: On January 1, 2007, A acquired a 20%…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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