On December 31, 20012 Clark Company acquired a 75% interest in Nuber Inc. for $3

Question

On December 31, 20012 Clark Company acquired a 75% interest in Nuber Inc. for $3,200,000. The acquisition-date fair value of the 25% non-controlling interest was $1,000,000. The book value of Nuber as of the acquisition date was $3,500,000, although this amount did not include in-process research and development valued by Clark at $300,000. The book value of all other assets was equal to their fair value. Prepare an allocation of this goodwill between the Clark and the non-controlling interest of Nuber.

Explanation / Answer

Fair Value of non controlling interest $ 1,000,000.00 Share of noncontrolling interest 25% Fair value of the firm (1,000,000/25%) $ 4,000,000.00 Book Value of Nober on the date of acquisition $ 3,500,000.00 Add: Value of inprocess R&D $      300,000.00 Total Book Value $ 3,800,000.00 Value of Goodwill (4,000,000-3,800,000) $      200,000.00 Share of Goodwill: Non-Controlling interest @25% $        50,000.00 Clark Company @75% $      150,000.00

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