Fredericks Limited Acquired the Identifiable Assets and Liabilities of Nicole

question 21

Multiple Choice

Fredericks Limited acquired the identifiable assets and liabilities of Nicole Limited for €134 000. The items acquired, stated at fair value, are:
• Plant €72 000
• Inventory €40 000
• Trade receivables €18 000
• Patents €10 000
• Trade payables €16 000.

The difference on acquisition is:

• A) Gain on bargain purchase €10 000
• B) Gain on bargain purchase €16 000
• C) Goodwill of €10 000
• D) Goodwill of €124 000.

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Definitions:

Unjust Enrichment

A legal principle where one person benefits at another's expense without legal justification, prompting a remedy to correct the imbalance.

Mortgaged Property

Real estate or property whose ownership is conditional upon the repayment of a loan secured by the property itself.

Estate

An individual's net worth in the eyes of the law, encompassing all personal property, real property, and other assets.

Ungifted Cash

Cash that a person holds and has not been received as a gift.