Yinhu Company pays HK$318,000,000 to purchase all the outstanding ordinary shares of Erin Corporation. At the date

Question:

Yinhu Company pays HK$318,000,000 to purchase all the outstanding ordinary shares of Erin Corporation. At the date of purchase the net assets of Erin have a book value of HK$290,000,000. Yinhu’s management allocates HK$20,000,000 of the excess cost to undervalued land on the books of Erin. What should be done with the rest of the excess?