Parent Company acquired all the net assets of Sub Company on December 31, 2021, for 1041000 cash. The balance sheet of Sub Company immediately prior to the acquisition showed:
Book value Current assets: 860000
Fair value Current assets: 189000
Book value Plant and equipment: 941000
Fair value Plant and equipment:484000
Book value Liabilities: 72000
Fair value Liabilities: 40000
Common stock: 54000
Other contributed capital:67000
Retained earnings: 1608000
As part of the negotiations, Parent agreed to pay the stockholders of Sub 66000 cash if the post-combination earnings of Parent averaged 1041000 or more per year over the next two years. The estimated fair value of the contingent consideration was 51000 on the date of the acquisition.
1. The journal entry on the Parent's books to record the acquisition would include amount of goodwill.

Answer rating: 100% (QA)

Journal Entry Particulars Amount Amount Current Asset Ac Dr ... View the full answer