P acquired 100% of the shares of S on Jan 1 2018 by paying $350,000. On...
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P acquired 100% of the shares of S on Jan 1 2018 by paying $350,000. On that date, the books value of the assets of S was $500,000 and abilities was $200,000. Also, on that date, the book value of common stock of S the $200,000 and retained earnings was $100.000. The book values and fair values of assets and liabilities of S were same except for land which had increased in value by $20,000 and inventories which had decreased in value by $8,000 The amount paid for goodwill by Pis $22,000 $38,000 $312,000 So because a bargain will be recorded in this transaction since the purchase price is less than the fair value of net assets. P acquired 100% of the shares of S on Jan 1 2018 by paying $350,000. On that date, the books value of the assets of S was $500,000 and abilities was $200,000. Also, on that date, the book value of common stock of S the $200,000 and retained earnings was $100.000. The book values and fair values of assets and liabilities of S were same except for land which had increased in value by $20,000 and inventories which had decreased in value by $8,000 The amount paid for goodwill by Pis $22,000 $38,000 $312,000 So because a bargain will be recorded in this transaction since the purchase price is less than the fair value of net assets.
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Related Book For
Advanced Accounting
ISBN: 978-1259444951
13th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni
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