Question 3 (1 point) B On April 1, 2010, Parson Corp. purchased 80% of the outst

Question

Question 3 (1 point) B On April 1, 2010, Parson Corp. purchased 80% of the outstanding stock of Sloan Corp. for $700,000 cash. Parson determined that the fair value of the net identifiable assets was $800,000 on the date of acquisition. The fair value of Sloan's stock at date of acquisition was $18 per share. Sloan ada totaiof0 sthares of stock isued and outstanding prior to the acquisition. What is the amount of goodwill that should be recorded by Parson at date of acquisition? 0 $ 60,000 $80,000 $120,000 Save Save sponses Go to Submit Qulz

Explanation / Answer

Amount of goodwill is $80000

Explanation;

Amount of goodwill at the time of acquisition is calculated with the help of following formula;

Goodwill =

(Consideration paid + Fair value of noncontrolling interest) – (Fair value of assets)

Consideraion paid = $700000

Fair value of noncontrolling interest ($18 * 10000 shares) = $180000

Fair value of assets = $800000

Now let’s put these values in the formula;

Goodwill = ($700000 + $180000 – $800000) = $80000

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