28 Sub Corporation reports net assets of P300,000 at book value. These net assets have anestimated fair value of P350,000. Parent Corporation buys 80% ownership of Sub for P300,000;there is a control premium of P10,000 included in the purchase price.Of the goodwill reported in the consolidated balance sheet (as of date of acquisition),how much is attributable to the non-controlling interest? * AO 4,500O 5,000O 3,0002,500

Answered: Sub Corporation reports net assets of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sub Corporation reports net assets of P300,000 at book value. These net assets have an
estimated fair value of P350,000. Parent Corporation buys 80% ownership of Sub for P300,000;
there is a control premium of P10,000 included in the purchase price.
Of the goodwill reported in the consolidated balance sheet (as of date of acquisition),
how much is attributable to the non-controlling interest? * A
O 4,500
O 5,000
O 3,000
2,500

Expert Solution

Step 1

Generally, the Company purchases another company's business by giving the purchase price to the seller company and getting the seller company's assets. When the buying firm provides more money to the selling firm than when the net worth is obtained from the selling firm. The balance of funds given by the buyer's company is called goodwill.

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