(Calculation of goodwill, LO 1) On December 31, 2005 Resolute Inc. (Resolute)

purchased 100% of the common shares of Uno Ltd. (Uno) for $22,000,000. At the time of the purchase, Resolute’s management made the following estimates of the fair values of Uno’s assets and liabilities:

Required:
Calculate the amount of goodwill that Resolute would report on its December 31, 2005 consolidated balance sheet as a result of its purchase of Uno. How much goodwill would Resolute report on its unconsolidated balance sheet on December 31, 2005 as a result of the purchase? Explain.

Transcribed Image Text:

Assets $25,000,000 Liabilities 6,000,000