Question: Please can someone answer this with solution for me to understand well... Thank you! 1. Silent Co. acquires 80% controlling interest in Peaceful Co. for
Please can someone answer this with solution for me to understand well... Thank you!
1. Silent Co. acquires 80% controlling interest in Peaceful Co. for $1.2M. Peaceful's Co. identifiable assets and liabilities have fair values of $3.3M and $1.7M, respectively. Included in Peaceful's assets is a web press machine with fair value of $900,000 which Silent Co. intends to sell immediately. The machines qualifies for classification as 'held for sale'. The costs to sell are $150,000. Silent Co. opts to measure the non-controlling interest at fair value. How much is the goodwill? (Assume the fair value of NCI is equal to the grossed-up value of the consideration transferred multiplied by the percentage.)
2. Carpenter Co. acquires 100% controlling interest in Wood Co. by issuing 2,000 shares with par value per share of $100 and fair value per share of $500. Carpenter Co. incurs stock issuance costs of $10 per share. On acquisition date, Woods Co. identifiable assets and liabilities have fair values of $2.8M and $1.6M, respectively. Carpenter Co. incurred $40,000 in hiring an independent appraiser to value Wood's assets and liabilities. After the combination, Carpenter intends to eliminate some of Woods activities. The estimated costs are $20,000. In addition, Carpenter Co. expects to incur losses of$80,000 during the first year after the business combination. How much is the goodwill (gain on bargain purchase)?
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