On 1 January 2001 H acquired 80% of the share capital of S for $1,100,000.
The share capital and reserves of the two companies were:
At 1 January At 31 December
2001 2005
$000 $000
Share capital H 1,000 1,200
S 400 400
Retained earnings H 800 1,300
S 500 800
What was the goodwill arising on H’s acquisition of S?
A $200,000
B $780,000
C $380,000
D $880,000

24 C 1,100,000 – 4/5 (400,000 + 500,000)