Cheers Acquired 100% of Tapp's Shares for $150,000

question 16

Multiple Choice

$$\begin{array} { | l | r | r | } \hline & \text { Cheers Co. } & \text { Tapp Ltd. } \\\hline \text { Current assets } & \$ 240,000 & \$ 40,000 \\\hline \text { Net capital assets } & \underline { 400,000 } & \underline { 240,000 } \\\hline & \$ \underline { 640,000 } & \$ \underline { 280,000 } \\\hline \text { Current liabilities } & \$ 168,000 & \$ 140,000 \\\hline \text { Long-term debt } & 80,000 & 48,000 \\\hline \text { Share capital } & 360,000 & 50,000 \\\hline \text { Retained earnings } & \underline { 32,000 } & \underline { 42,000 } \\\hline & \$ \underline { 640,000 } & \$ \underline { 280,000 } \\\hline\end{array}$$ Cheers acquired 100% of Tapp's shares for $150,000. On the acquisition date, the fair value of the current assets and the net capital assets of Tapp Ltd. were $104,000 and $216,000, respectively. The fair value of the liabilities equalled their book value. What is the amount of goodwill created in this acquisition?

• A)$(24,000)
• B)$ 0
• C)$18,000
• D)$40,000

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Definitions:

Microtubules

Cylindrical structures found in the cytoplasm of eukaryotic cells, involved in cell shape, division, and transport processes.

Penetrate

To enter or pierce through a substance, structure, or area, often implying a breach of a barrier or defense.

Host

An organism that harbors another organism, often providing nourishment and shelter to parasites.

Chlorophyte

Chlorophyte refers to green algae, a diverse group of photosynthetic organisms found in various aquatic environments, part of the eukaryotic kingdom Chlorophyta.