Pratt Company buys 65% of the voting stock of Sully Corporation at a 40% premium over...
Pratt Company buys 65% of the voting stock of Sully Corporation
at a 40% premium over the market price of Sully's stock.
Which statement is most likely to be true concerning the
goodwill resulting from this acquisition?
| A. |
The goodwill allocation to Pratt is more than 65% of the total goodwill. |
|
| B. |
All goodwill is allocated to the noncontrolling interest in Sully. |
|
| C. |
Goodwill is allocated 60% to Pratt and 40% to the noncontrolling interest in Sully. |
|
| D. |
Goodwill is allocated 65% to Pratt and 35% to the noncontrolling interest in Sully. |
Homework Answers
Answer : D. Goodwill is allocated 65% to Pratt and 35% to the noncontrolling interest in Sully
Explanation:-
Since the Pratt Company has purchased only 65%, so Goodwill will also be allocated @ 65% to Pratt and rest 35% to the noncontrolling interest in Sully. Premium paid on acquisition does not affect the controlling.
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