Petroni Ltd Acquired All the Issued Share Capital of Wallace

Multiple Choice

Petroni Ltd acquired all the issued share capital of Wallace Ltd on 1 April 20X1.Wallace Ltd's shareholders equity (all at fair value) at that date was as follows:
$\begin{array}{llcc} &\text { 000s} & \\ \text { Paid up capital } &\$3000\\ \text {General reserve } &\$1000\\ \text { Retained profits } &\$500\\\end{array}$



What was the cost of acquisition (that is, the control date fair value of the consideration provided) to Petroni Ltd, if consolidation goodwill resulting from the business combination (purchased goodwill) of $500 000 was recognised in the consolidated financial statements prepared on 1 April 20X1?

A) $500 000
B) $5 000 000
C) $4 000 000
D) $4 500 000