12. On January 1, 2010, Big Co. acquired an 80% interest in Small Corp. for $1,0
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Question
12. On January 1, 2010, Big Co. acquired an 80% interest in Small Corp. for $1,000,000. There is no active trading market for Small's stock. The fair value of Small's net assets was $1,200,000 and Big accounts for its interest using the acquisition method.
Required:
Determine the amount of goodwill to be recognized in this acquisition.
12. On January 1, 2010, Big Co. acquired an 80% interest in Small Corp. for $1,000,000. There is no active trading market for Small's stock. The fair value of Small's net assets was $1,200,000 and Big accounts for its interest using the acquisition method.
Required:
Determine the amount of goodwill to be recognized in this acquisition.
On January 1, 2010, Big Co. acquired an 80% interest in Small Corp. for $1,000,000. There is no active trading market for Small's stock. The fair value of Small's net assets was $1,200,000 and Big accounts for its interest using the acquisition method. Determine the amount of goodwill to be recognized in this acquisition.Explanation / Answer
Amount of goodwill Purchase price $ 1,000,000.00 Less : fair market value for 80% share 80%*$1200000 $ 960,000.00 Amount of goodwill to be recognized $ 40,000.00
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