On December 31, 2020, abc Company purchased all shares (100%) of Subsidiary Company from the current owners of Subsidiarys shares. Subsidiarys balance sheet and other information follows:

Current assets $300

Net buildings and equipment $650

Land $150

Total assets $1,100

Current liabilities $100

Long-term liabilities $300

Common shares $250

Retained earnings $450

Total liabilities and equity $1,100

On December 31, 2020, the fair values of Subsidiarys assets and liabilities follow:

Current assets $350

Net buildings and equipment $800

Land $260

Total assets $1,100

Current liabilities $110

Required:

1. Assume that abc paid $1,350 for all the shares. Calculate what Parent paid for goodwill. Show calculations.
2. Assume that abc paid $1,350 for all the shares. Record the journal entry for the purchase of Subsidiary shares.
3. Assume that abc paid $1,000 for 100% of the shares. Discuss any issues that arise from paying this amount.