Question: A parent company acquired an 80 interest in a subsidiary
A parent company acquired an 80% interest in a subsidiary on January 1, 2011, at a price high enough to result in goodwill. Included in the assets of the subsidiary are inventory with a book value of $50,000 and a fair value of $55,000 and equipment with a book value of $100,000 and a fair value of $160,000. The equipment has a 5-year remaining life. What impact would the inventory and equipment, acquired in the acquisition have on consolidated net income in 2011 and 2012?
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