Graham Limited Acquired 90% of the Share Capital and Reserves

Multiple Choice

Graham Limited acquired 90% of the share capital and reserves of Terry Limited for $340,000. Share capital was $100 000 and reserves amounted to $124 000. All assets and liabilities were recorded at fair value except equipment which was recorded at $60 000 below fair value. The company tax rate was 30%. The partial goodwill method is adopted by the group. The amount of goodwill acquired by Graham Limited in this business combination was:

A) $5 600
B) $10 000
C) $10 600
D) $26 000