Cheers Acquired 100% of Tapp's Shares for $144,000

question 29

Multiple Choice

$\begin{array}{|l|r|r|r}\hline& \text { Cheers Co } & \text { Tapp Ltd } & \underline{\text { Tapp Ltd }} \\&\text { Book Value } & \text { Book Value } & \underline{\text { Fair Value }} \\\hline\text { Current assets } & \$ 512,000 & \$ 62,400 & \$ 65,600 \\\hline \text { Net capital assets } & \underline{448,000} & \underline{97,600} & \underline{110,400} \\\hline & \$ \underline{960,000} & \$ \underline{160,000} & \\\hline \text { Current liabilities } & \$ 96,000 & \$ 12,800 & 12,800 \\\hline \text { Long-term debt } & 288,000 & 35,200 & 40,000 \\\hline \text { Share capital } & 320,000 & 64,000 & \\\hline \text { Retained earnings } & \underline{256,000} & \underline{48,000} & \\\hline & \$ \underline{\underline{960,000}} & \$ \underline{160,000} & \\\hline\end{array}$ Cheers acquired 100% of Tapp's shares for $144,000. The condensed statements of financial position for Cheers and Tapp are given above, as well as the fair values of Tapp's assets and liabilities on the acquisition date. What is the amount of the goodwill on the acquisition?

• A)$0
• B)$11,200
• C)$20,800
• D)$32,000

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Definitions:

Majority Voting

A voting system where decisions are made based on the preference of more than half of the votes cast, commonly used in elections and organizational decision-making.

Moderately Priced Bouquet

A flower arrangement that is priced at a level considered reasonable or average, not too expensive or too cheap.

Expensive Bouquet

Refers to a collection of flowers that has a high price, often due to its quality, rarity, or the occasion it is meant for.

Marginal Benefit

The increased enjoyment or advantage obtained from consuming one more unit of a good or service.