On 1 January 20X0, Zed Ltd Acquired 90 % of the Share

question 14

Multiple Choice

On 1 January 20X0, Zed Ltd acquired 90 % of the share capital of Ned Ltd for $900 000 cash.At that date, the equity section of Ned Ltd's balance sheet was as follows:
$\begin{array}{llcc}&\$\\ \text {Share capital } &700000 \\ \text { Retained profits} &50000\\ \text { Asset revaluation reserve } &100000\\\end{array}$


Assume all assets and liabilities were recorded at their fair values, except for a piece of equipment recorded at $50 000 but Zed Ltd considers it to have a fair value of $100 000. This equipment is not revalued by Ned Ltd.
The difference on acquisition is:

• A)a larger amount of goodwill under the partial goodwill method compared with the full method
• B)a larger amount of goodwill under the full goodwill method compared with the partial method
• C)neither A nor B above because the difference is a bargain purchase
• D)not conclusively comparable under the full or partial methods from the available information

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Definitions:

Durkheim

A French sociologist best known for his foundational contributions to the field of sociology, including his theory on the social causes of suicide.

Marx

Karl Marx, a 19th-century philosopher, economist, and revolutionary socialist who developed the theories of Marxism, focusing on class struggle and the critique of capitalism.

Weber

Max Weber was a German sociologist, economist, and political scientist known for his ideas on bureaucracy, social stratification, and the sociology of religion, among others.

Gender

Socially constructed roles, behaviors, expressions, and identities associated with being male, female, or non-binary.