On January 1, 20X8, Colorado Corporation acquired 75 percent of Denver Company\'
ID: 2568144 • Letter: O
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 CompanyBalance 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