This is from the Osbourne questions I keep getting £175000

Leme plc invested £475,000 in 300,000 ordinary shares of £1 each in Avon Limited.
At the date of acquisition the equity of Avon Limited comprised £500,000 in share capital and £150,000 in retained earnings.
What is the value of goodwill at the date of acquisition?

£25,000
£200,000
£85,000
£175,000

Comments

  • Ateeb92Ateeb92 Posts: 8Registered
    I think I have been able to find the solution.
    It's...
    300,000 ordinary shares divided by £500,000 of share capital X 100 = 60% ownership

    GOODWILL:
    Investment - £475,000
    Less Share Capital - (60% X 500000) = -£300,000
    Less Retained Earnings - (60% X 150000) = -£90,000

    Therefore gives the answer = £85,000
Sign In or Register to comment.