Unit 4 Post Problem 1

Compuation of Goodwill S Company Net Assets at Book Value Inventory 20,000 S Company acquisition date fair value 375,000 Other Assets 40,000 S Company acquisition date book value (120,000) Plant 140,000 Fair value in excess of book value 255,000 Liabilities (30,000) Fair value adjustments to: Long Term Debt (50,000) Plant (110,000) Net Assets at Book 120,000 Inventory (30,000) Net Assets at Market 260,000 Amount allocated to goodwill 115,000 Paid $300,000 for 80% Noncontrolling interest 20% Goodwill Allocation to Controlling and Noncontrolling Interest Acquisition date fair value 375,000 Total Controlling Noncontrolling Fair Market Value (260,000) Fair value at acquisition date 375,000 300,000 75,000 Goodwill 115,000 Relative fair value of S Company net assets (80% and 20%) (260,000) (208,000) (52,000) Goodwill 115,000 92,000 23,000 Controlling interest - 80% 92,000 Noncontrolling interest - 20% 23,000 Noncontrolling Interest Goodwill 115,000 20% of 260,000 + 23,000 goodwill = 75,000