Question
On January 1, 2021, Parent acquired Sub by issuing $41,000 in common shares. On that date, Sub's fair value of Current Assets and Fixed Assets
On January 1, 2021, Parent acquired Sub by issuing $41,000 in common shares. On that date, Sub's fair value of Current Assets and Fixed Assets were worth $10,000 and $63,000, respectively. Further, on January 1, 2021, the fair value of Parent's Current and Fixed assets were worth $64,000 and $103,000 respectively.
Calculate goodwill on the date of acquisition.
Parent and Sub Inc. had the following balance sheets on December 31, 2021:
|
| Parent Inc | Sub Inc |
|
| (carrying value) | (carrying value) |
| Cash | $180,000 | $36,000 |
| Accounts Receivable | $100,000 | $41,000 |
| Inventory | $ 60,000 | $24,000 |
| Plant and Equipment (net) | $210,000 | $80,000 |
| Trademark | $ - | $0 |
| Goodwill | $0 | $25,000 |
| Total Assets | $550,000 | $206,000 |
|
|
|
|
| Current Liabilities | $ 80,000 | $51,000 |
| Bonds Payable | $330,000 | $20,000 |
| Common Shares | $ 100,000 | $80,000 |
| Retained Earnings | $ 40,000 | $55,000 |
| Total Liabilities and Equity | $550,000 | $206,000 |
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Advanced Accounting
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
11th edition
78025400, 978-0078025402
