Thad Ltd Acquired 100% of the Common Shares of Zoe Co

question 17

Multiple Choice

Thad Ltd. acquired 100% of the common shares of Zoe Co. for $560,000. At the time of acquisition, Zoe had the following: $$\begin{array} { | l | r | r | } \hline & \text { Book Value } & \text { Fair Value } \\\hline \text { Identifiable assets } & \$ 1,484,000 & \$ 1,518,000 \\\hline & & \\\hline \begin{array} { l } \text { Identifiable } \\\text { liabilities }\end{array} & 980,000 & 980,000 \\\hline\end{array}$$ In this acquisition, how much goodwill has been created?

• A)$0
• B)$22,000
• C)$35,000
• D)$56,000

---

Definitions:

Reserve Requirement

A regulation set by central banks requiring commercial banks to hold a certain amount of their deposits as reserves, either as cash in their vaults or as deposits with the central bank, to ensure liquidity.

Money Multiplier

The ratio of the increase in total money supply generated from an initial deposit in a banking system.

Compliance

The act of conforming to or following rules, regulations, standards, or laws.

Reserves

Funds or assets set aside to meet future liabilities, unexpected costs, or potential financial obligations.