1. **Problem Statement:** Calculate the goodwill arising on acquisition of Seek by Hide. 2. **Understanding Retained Earnings Calculation:** The retained earnings at acquisition date are given by: $$\text{Retained Earnings} = 9,500 + \left(\frac{9}{12} \times 14,000\right)$$ 3. **Explanation of $14,000$:** The $14,000$ represents the profit earned by Seek during the 12 months ending 30 June 20X6. Since acquisition occurred on 1 April 20X6, only 9 months of profit (from 1 July 20X5 to 31 March 20X6) are included in retained earnings at acquisition. 4. **Calculate the profit portion:** $$\frac{9}{12} \times 14,000 = 10,500$$ 5. **Calculate total retained earnings at acquisition:** $$9,500 + 10,500 = 20,000$$ 6. **Goodwill Calculation:** - Cash paid: $3,000 \times 8 = 24,000$ - Fair value of non-controlling interest (NCI): $1,000 \times 4 = 4,000$ - Fair value of net assets: - Share capital: $4,000$ - Retained earnings: $20,000$ - Fair value adjustment (land and buildings): $2,000$ - Total net assets: $4,000 + 20,000 + 2,000 = 26,000$ 7. **Goodwill:** $$\text{Goodwill} = (24,000 + 4,000) - 26,000 = 2,000$$ **Final answer:** Goodwill on acquisition is $2,000$.