On January 1, 20X8, Colorado Corporation acquired 75 percent of Denver Company\'

Question

On January 1, 20X8, Colorado Corporation acquired 75 percent of Denver Company's voting common stock for $90,000 cash. At that date, the fair value of the noncontrolling interest was $30,000. Denvers's balance sheet at the date of acquisition contained the following balances:

At the date of acquisition, the reported book values of Denver's assets and liabilities approximated fair value. Eliminating entries are being made to prepare a consolidated balance sheet immediately following the business combination.

Based on the preceding information, the amount of goodwill reported is:

Select one:

a. $10,000.

b. $0.

c. $15,000.

d. $20,000.

Denver Company
Balance Sheet
January 1, 20X8 Cash $10,000 Accounts Payable $35,000 Accounts Receivable 20,000 Notes Payable 50,000 Land 40,000 Common Stock 100,000 Building and Equipment 165,000 Additional Paid-In Capital 20,000 Less: Accumulated Depreciation (50,000) Retained Earnings (20,000) Total Assets $185,000 Total Liabilities and Equity $185,000

Explanation / Answer

Calculate amount of goodwill :

so answer is c) $15000

Total assets 185000 Less: Account payable (35000) Less: Notes payable (50000) Net assets 100000 Net assets value of acquisition share 75000 Purchase consideration 90000 Goodwill 15000

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.