Assume that microsoft corporation acquired 90 perent of the outstanding common stock of powerline technologies for $3,000,000 cash plus 200,000 shares of microsoft's $10 par value common stock having a market value of $80 per share. immediately prior to the acquisition. the trial balances of the two companies were as follows:

Dr(Cr)

Microsoft Powerline

Current Assets $10,000,000 $2000,000

Plant and equipment, net 35,000,000 7,000,000

Current Liabilities (5,000,000) (1,500,000)

Long-term liabilities (20,000,000) (3,000,000)

Common Stock (3,000,000) (100,000)

additional paid-in capital (5,600,000) (1,450,000)

Retairned Earnings (11,000,000) (3,000,000)

Accumulated other comprehensive (income) loss (400,000) 50,000

0 0

A review of the fair values of powerline's assets indicates that current assets are overvalued by $500,000 plant and equipment is overvalued by $6,000,000, and previously unrecorded brand names have a fair value of $3,000,000. the fair value of the noncontrolling interest is $1,800,000

Required.

a. Calculate total goodwill and its allocation to the controlling and noncontrolling interests, following U.S. GAAP

b. Prepare a working paper to consolidate the balance sheets of microsoft and powerline at the date of acquisition, following U.S. GAAP.

c. Assume microsoft uses IFRS and the alternative valuation method for noncontrolling interests. Calculate total total goodwill and repeat part b following IFRS.