Question
Parent Inc. and Sub Inc. had the following balance sheets on July 31, 2019: Parent Inc Sub Inc Sub Inc (carrying value) (carrying value) (fair
Parent Inc. and Sub Inc. had the following balance sheets on July 31, 2019:
| Parent Inc | Sub Inc | Sub Inc | |
| (carrying value) | (carrying value) | (fair value) | |
| Cash | $180,000 | $36,000 | $36,000 |
| Accounts Receivable | $100,000 | $40,000 | $40,000 |
| Inventory | $ 60,000 | $24,000 | $27,000 |
| Plant and Equipment (net) | $200,000 | $80,000 | $93,000 |
| Goodwill | $ - | $ 8,000 | |
| Trademark | $ - | $12,000 | $15,000 |
| Total Assets | $540,000 | $200,000 | |
| Current Liabilities | $ 80,000 | $50,000 | $50,000 |
| Bonds Payable | $320,000 | $20,000 | $24,000 |
| Common Shares | $ 90,000 | $80,000 | |
| Retained Earnings | $ 50,000 | $50,000 | |
| Total Liabilities and Equity | $540,000 | $200,000 |
Assuming that Parent Inc acquires 80% of Sub Inc on August 1, 2019 for cash of $180,000, what would be the amount of goodwill appearing on the Consolidated Balance Sheet on the date of acquisition if the proportionate consolidation method were used?
Parent Inc. and Sub Inc. had the following balance sheets on July 31, 2019:
| Parent Inc | Sub Inc | Sub Inc | |
| (carrying value) | (carrying value) | (fair value) | |
| Cash | $180,000 | $36,000 | $36,000 |
| Accounts Receivable | $100,000 | $40,000 | $40,000 |
| Inventory | $ 60,000 | $24,000 | $27,000 |
| Plant and Equipment (net) | $200,000 | $80,000 | $93,000 |
| Goodwill | $ - | $ 8,000 | |
| Trademark | $ - | $12,000 | $15,000 |
| Total Assets | $540,000 | $200,000 | |
| Current Liabilities | $ 80,000 | $50,000 | $50,000 |
| Bonds Payable | $320,000 | $20,000 | $24,000 |
| Common Shares | $ 90,000 | $80,000 | |
| Retained Earnings | $ 50,000 | $50,000 | |
| Total Liabilities and Equity | $540,000 | $200,000 |
Assuming that Parent Inc acquires 80% of Sub Inc on August 1, 2019 for cash of $180,000, the assets section of Parent's consolidated balance sheet on the date of acquisition would total what amount if the proportionate consolidation method were used?
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Auditors Guide To IT Auditing
Authors: Richard E. Cascarino
2nd Edition
1118147618, 978-1118147610
