Lu Nan Limited Acquired 80% of the Share Capital and Reserves

Multiple Choice

Lu Nan Limited acquired 80% of the share capital and reserves of Hui Limited for $20 000.Share capital was $10 000 and reserves amounted to $6 000.All assets and liabilities were recorded at fair value except plant which was recorded at $1 000 below fair value.The company tax rate was 30%.The partial goodwill method is adopted by the group.The amount of goodwill acquired by Lu Nan Limited in this business combination was:

A) $4 000
B) $6 640
C) $7 200
D) $13 360.