A company pays $70 million in cash to acquire 70% of the voting stock of another company. The fair value of the noncontrolling interest at the date of acquisition is $25 million, and the book value of the acquired company is $20 million. There are no revaluations of the acquired companys identifiable net assets. Goodwill to the noncontrolling interest, following U.S. GAAP, is:

a. $0

b. $19 million

c. $22.5 million

d. $15 million

2. A company pays $95,000 in cash and stock to acquire 80% of the voting stock of another company. The fair value of the noncontrolling interest is $21,250. The book value of the acquired company is $66,250, and no revaluations of acquired identifiable net assets are necessary. What percentage of total goodwill is allocated to the controlling interest, following U.S. GAAP?

a. 84%

b. 86%

c. 80%

d. 82%

3. Pratt Company buys 65% of the voting stock of Sully Corporation at a 40% premium over the market price of Sullys stock. Which statement is most likely to be true concerning the goodwill resulting from this acquisition?

1. Goodwill is allocated 60% to Pratt and 40% to the noncontrolling interest in Sully.
2. All goodwill is allocated to the noncontrolling interest in Sully.
3. Goodwill is allocated 65% to Pratt and 35% to the noncontrolling interest in Sully.
4. The goodwill allocation to Pratt is more than 65% of the total goodwill.

4. A company pays $40,000 in cash and stock to acquire 65% of the voting stock of another company. The fair value of the 35% noncontrolling interest in the acquired company is $22,000. The book value of the acquired company is $25,000. At the date of acquisition, the acquired companys plant assets are overvalued by $6,000 and it has previously unreported identifiable intangible assets valued at $10,000. What is the total amount of goodwill recognized for this acquisition, following U.S. GAAP?

1. $37,000
2. $11,000
3. $33,000
4. $21,000

Use the following information to answer Questions 5 and 6.

A parent acquired 90% of the voting stock of a subsidiary for $20,000. The fair value of the noncontrolling interest was $2,000. The subsidiarys book value at the date of acquisition was $1,000. Following is revaluation information for the subsidiarys identifiable net assets at the date of acquisition:

	Fair Value Book Value
Inventories	$ (400)
Equipment	(10,000)
Identifiable intangibles	16,000

5. What is total consolidated goodwill at the date of acquisition, following U.S. GAAP?

a. $14,400

b. $13,400

c. $15,400

d. $16,400