Spellman Company acquires 90% of Moore Company in a business combination. The total consideration is agreed upon,

Question:

Spellman Company acquires 90% of Moore Company in a business combination. The total consideration is agreed upon, but the exact nature of Spellman's payment is not yet fully specified. This business combination is accounted for as a purchase. It is expected that at the date of the business combination, the fair value will exceed the book value of Moore's assets minus liabilities. Spellman desires to prepare consolidated that include the of Moore.

Required:
a. Explain how the method of accounting for a business combination affects whether is reported.
b. If is recorded, explain how to determine the amount of .
c. From a conceptual standpoint, explain why consolidated should be prepared.
d. From a conceptual standpoint, identify the first necessary condition before consolidated are prepared.

Goodwill
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