
Big Ltd buys the business of Little Ltd with an issue of 400 000 shares of £1.00 each at a premium of £0.25 and £100 000 in cash.
The table shows an extract from the balance sheet of Little Ltd.
- fixed assets – £260k
- current assets – £80k
- current liabilities – £50k
How much is paid for Goodwill for Little Ltd by Big Ltd?
Select ONE answer:
- £210 000
- £260 000
- £310 000
- £340 000
Show your workings to arrive at your answer, and explain and justify your reasons:
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This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 3
- Not correct
- Not correct
- Correct – 400,000 * £1.25 = £500K + £100K = £600k – (£260k + £80k – £50k) = £310,000
- Not correct
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