Big Ltd has purchased 100% of Little Ltd for a cash payment of $800 000.The additional costs to Big Ltd to complete the purchase were $3000.An extract from the statement of financial position for Little Ltd at the date of acquisition shows:

\begin{array} { | l | r | r | } \hline & \mathbf {\$} & \mathbf {\$} \\\hline\mathbf {Assets } & & \\\hline \text { Current assets } & & \\\hline \text { Cash } & 12000 & \\\hline \text { Net accounts receivable } & 25000 & \\\hline \text { Inventory } & \underline { 80000 } & \\\hline \text { Total current assets } & & 117000 \\\hline & & \\\hline \text { Non-current assets } & & \\\hline \text { Land and buildings (net) } & 200000 & \\\hline \text { Vehicles (net) } & 90000 & \\\hline \text { Equipment (net) } & \underline { 157000 } & \\\hline \text { Total non-current assets } & & 447000 \\\hline & & \\\hline \text { Total assets } & & 564000 \\\hline & & \\\hline \mathbf { Liabilities } & & \\\hline \text { Accounts payable } & 8000 & \\\hline \text { Loan } & \underline { 100000 }& \\\hline & & \\\hline \text { Total liabilities } & & 108000 \\\hline & & \\\hline \mathbf {Net~ assets } & & \underline { 456000 }\\\hline\end{array}

Additional information:
The assets and liabilities of Little Ltd are stated at fair value except that:
Land and buildings have a fair value of $300 000
Accounts receivable have a fair value of $20 000.
Little owns a licence that has not been recorded in the accounts.Its fair value is $150 000.
What is the amount of purchased goodwill that has been acquired by Big Ltd?
A) $242 000
B) $344 000
C) $252 000
D) $102 000

An Intangible Asset May Be Recorded

Multiple Choice

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