(Calculate the amount of goodwill, LO 1) On August 31, 2006 Hoselaw Inc.

(Hoselaw) purchased 100% of the common shares of Upsalquitch Ltd.

(Upsalquitch) for $16,000,000. At the time of the purchase, Upsalquitch’s management made the following estimates of the fair values of Upsalquitch’s assets and liabilities:

Required:

a. Calculate the amount of non-controlling interest that Hoselaw would report on its August 31, 2006 consolidated balance sheet as a result of its purchase of Upsalquitch.

b. What amount would be included in each asset and liability account on the August 31, 2006 consolidated balance sheet as a result of the purchase of Upsalquitch?

c. What does non-controlling interest on the balance sheet represent? Explain why it appears. How should users of financial statements interpret noncontrolling interest?

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Current assets Tangible capital assets Book Value of Upsalquitch's Assets and Liabilities on August 31, 2006 Fair Value of Upsalquitch's Assets and Liabilities on August 31, 2006 $2,500,000 $2,000,000 6,000,000 7,200,000 Patents 200,000 2,000,000 Current liabilities 1,750,000 1,800,000 Long-term debt 4,250,000 4,000,000