Assume on July 1, 2022, a parent company paid $1,656,000 to purchase an 80% interest in a subsidiary's voting common stock. On that date, the fair value of the 20% interest not purchased by the parent company is $414,000. The acquisition-date fair value of the identifiable net assets of the subsidiary is $2,160,000. What is the amount of goodwill (or bargain purchase gain) assigned to the controlling and noncontrolling interests, respectively, on the acquisition date?
Assume on July 1, 2022, a parent company paid $1,656,000 to purchase an 80% interest in a subsidiary's voting common stock. On that date, the fair value of the 20% interest not purchased by the parent company is $414,000. The acquisition-date fair value of the identifiable net assets of the subsidiary is $2,160,000. What is the amount of goodwill (or bargain purchase gain) assigned to the controlling and noncontrolling interests, respectively, on the acquisition date?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:1. Assigning bargain purchase gain (i.e., "negative goodwill") to controlling and noncontrolling interests.
Assume on July 1, 2022, a parent company paid $1,656,000 to purchase an 80% interest in a subsidiary's
voting common stock. On that date, the fair value of the 20% interest not purchased by the parent
company is $414,000. The acquisition-date fair value of the identifiable net assets of the subsidiary is
$2,160,000. What is the amount of goodwill (or bargain purchase gain) assigned to the controlling and
noncontrolling interests, respectively, on the acquisition date?
1. $72,000 goodwill assigned to the controlling interest and $18,000 goodwill assigned to the
noncontrolling interest.
2. $45,000 bargain purchase gain assigned to the controlling interest and $45,000 bargain purchase gain
assigned to the noncontrolling interest.
3. $72,000 bargain purchase gain assigned to the controlling interest and $18,000 bargain purchase gain
assigned to the noncontrolling interest.
4. $90,000 bargain purchase gain assigned to the controlling interest and zero assigned to the
noncontrolling interest.
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