Bristle Co. acquired 75 percent of Silver Corporation's common stock on December 31, 20X8, for $300,000. The fair value of the non-controlling interest at that date was determined to be $100,000. Silver's balance sheet immediately before the combination reflected the following balances: Cash and Receivables $40,000 Inventory 70,000 Land 90,000 Buildings and Equipment (net) 250,000 Total Assets $450,000 Accounts Payable $30,000 Income Taxes Payable 40,000 Bonds Payable 100,000 Common Stock 100,000 Retained Earnings 180,000 Total Liabilities and Stockholders' Equity $450,000 A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and, $300,000 respectively. Goodwill is assigned proportionately to Bristle and the non- controlling shareholders. What amount of goodwill will be reported in the consolidated balance sheet immediately following the acquisition? a. $0 b. $120,000 c. $65,000 d. $20,000
Bristle Co. acquired 75 percent of Silver Corporation's common stock on December 31, 20X8, for $300,000. The fair value of the non-controlling interest at that date was determined to be $100,000. Silver's balance sheet immediately before the combination reflected the following balances: Cash and Receivables $40,000 Inventory 70,000 Land 90,000 Buildings and Equipment (net) 250,000 Total Assets $450,000 Accounts Payable $30,000 Income Taxes Payable 40,000 Bonds Payable 100,000 Common Stock 100,000 Retained Earnings 180,000 Total Liabilities and Stockholders' Equity $450,000 A careful review of the fair value of Silver's assets and liabilities indicated that inventory, land, and buildings and equipment (net) had fair values of $65,000, $100,000, and, $300,000 respectively. Goodwill is assigned proportionately to Bristle and the non- controlling shareholders. What amount of goodwill will be reported in the consolidated balance sheet immediately following the acquisition? a. $0 b. $120,000 c. $65,000 d. $20,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Bristle Co. acquired 75 percent of Silver Corporation's common stock on December 31,
20X8, for $300,000. The fair value of the non-controlling interest at that date was
determined to be $100,000. Silver's balance sheet immediately before the combination
reflected the following balances:
Cash and Receivables
$40,000
Inventory
70,000
Land
90,000
Buildings and Equipment (net)
250,000
Total Assets
$450,000
Accounts Payable
$30,000
Income Taxes Payable
40,000
Bonds Payable
100,000
Common Stock
100,000
Retained Earnings
180,000
Total Liabilities and Stockholders' Equity $450,000
A careful review of the fair value of Silver's assets and liabilities indicated that inventory,
land, and buildings and equipment (net) had fair values of $65,000, $100,000, and,
$300,000 respectively. Goodwill is assigned proportionately to Bristle and the non-
controlling shareholders.
What amount of goodwill will be reported in the consolidated balance sheet
immediately following the acquisition?
a. $0
b. $120,000
c. $65,000
d. $20,000
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