Penny Corporation acquired 85% of Sawyer Company’s common stock for $216,000 in cash on January 1,...
Penny Corporation acquired 85% of Sawyer Company’s common stock for $216,000 in cash on January 1, 2020. At that date, Sawyer had $157,000 of reported net assets (book value). These reported net assets were fairly stated, except land was overvalued by $13,000, unrecorded licensing agreements were valued at $26,000 and unrecorded favorable location was valued at $12,000. The estimated fair value of the noncontrolling interest is $32,000 at the acquisition date.Calculate total goodwill and its allocation to the controlling and noncontrolling interests. You must show your work to receive credit.
Homework Answers
|
Acquisition cost |
216000 |
|
Fair value of noncontrolling interest |
32000 |
|
Total fair value |
$248000 |
|
Book value |
157000 |
|
Excess of fair value over book value |
91000 |
|
Overvalued land |
13000 |
|
unrecorded licensing agreements |
(26000) |
|
unrecorded favorable location |
(12000) |
|
Goodwill |
$66000 |
|
Controlling interest (66000*85%) |
$561000 |
|
Noncontrolling interest (66000*15%) |
$9900 |
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Penny Corporation acquired 85% of Sawyer Company’s common stock
for $216,000 in cash on January 1,...
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