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Sophisticated Lighting Ltd started its operations to sell specialized eco-friendly LED lighting by purchasing inventory at a price of $50,000 on 1...
Sophisticated Lighting Ltd started its operations to sell specialized eco-friendly LED lighting by purchasing inventory at a price of $50,000 on 1 July 2017. On 31 December 2017, Grandose Lighting Ltd offered to purchase Sophisticated Lighting Ltd for $70,000 including $20,000 for goodwill. Sophisticated Lighting Ltd declined the offer and instead decided to purchase Sensational Lighting Ltd on 1 March 2018 for $300,000 comprised of $250,000 of net assets and $50,000 goodwill.
State the relevant paragraph in AASB 138 to justify your answer, and identify whether or not Starlite Pty Ltd can recognize:
(a) Goodwill on the balance sheet as at 31 December 2017.
(b) Goodwill on the balance sheet as at 1 March 2018
(c) Amortization expense during the year ended 31 December 2018.
A revaluation of any goodwill in the future.
