Parent Corporation acquired 80% of the common stock of Subs, Inc. on January 1, 2017 for $310,000. The total book value of Subs, Inc. stock on the date of combinations was $300,000. On the date of combination, all assets and liabilities of Subs, Inc. had fair values equal exceeded their book values, except that the fair value of inventory, land, and building and equipment each exceeded their book value by $5,000, $10,000, and $60,000 respectively. Any remaining differential is to be assigned to goodwill.
Calculation of Goodwill | ||
Amount paid to acquire 80% stake | $ 310,000 | |
Book value 80% | 240,000 | |
Excess | $ 70,000 | |
Allocated to | ||
Inventory | 80% | 4,000 |
Land & Building | 80% | 8,000 |
equipment | 80% | 48,000 |
Goodwill | $ 10,000 | |
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