Unity Limited Acquired 100% of the Share Capital of Bellvista

question 18

Multiple Choice

Unity Limited acquired 100% of the share capital of Bellvista Limited for $300 000. Bellvista had total shareholder's equity of $200 000. The book values of Bellvista Limited's assets were: buildings $100 000, machinery $120 000. The fair values of these assets were: buildings $180 000, machinery $140 000. The tax rate is 30%. The acquisition analysis will determine:

• A) a gain on bargain purchase of $100 000.
• B) a goodwill of $30 000.
• C) a goodwill of $80 000.
• D) a gain on bargain purchase of $20 000.

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