On January 1, 2018 Moonlight Company paid $8.50 per share to acquire 60% of the 100,000 voting common stock of Star Company whose shares are trading at $7.00. Star's building is undervalued by $30,000 with 5 years remaining useful life. The following information is available under this acquisition: Controlling Interest (60%) $510,000 Noncontrolling Interest (40%) $280,000 Total Fair value at $790,000 acquisition Fair value of Star identifiable net 665,000 assets Goodwill (A) Briefly explain the effects of the excess price paid by Moonlight over the trading value of Star's shares on both: - goodwill and - consolidation entries. (B) Calculate the goodwill to be allocated to controlling and noncontrolling interest and prepare consolidation entry 'A' that is appropraite in the above case.
On January 1, 2018 Moonlight Company paid $8.50 per share to acquire 60% of the 100,000 voting common stock of Star Company whose shares are trading at $7.00. Star's building is undervalued by $30,000 with 5 years remaining useful life. The following information is available under this acquisition: Controlling Interest (60%) $510,000 Noncontrolling Interest (40%) $280,000 Total Fair value at $790,000 acquisition Fair value of Star identifiable net 665,000 assets Goodwill (A) Briefly explain the effects of the excess price paid by Moonlight over the trading value of Star's shares on both: - goodwill and - consolidation entries. (B) Calculate the goodwill to be allocated to controlling and noncontrolling interest and prepare consolidation entry 'A' that is appropraite in the above case.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:On January 1, 2018 Moonlight Company paid $8.50 per share to acquire 60% of the 100,000 voting common
stock of Star Company whose shares are trading at $7.00. Star's building is undervalued by $30,000 with 5
years remaining useful life. The following information is available under this acquisition:
Controlling Interest
(60%)
$510,000
Noncontrolling
Interest (40%)
$280,000
Total
Fair value at
$790,000
acquisition
Fair value of Star
identifiable net
665,000
assets
Goodwill
(A) Briefly explain the effects of the excess price paid by Moonlight over the trading value of Star's shares on
both:
- goodwill and
- consolidation entries.
(B) Calculate the goodwill to be allocated to controlling and noncontrolling interest and prepare
consolidation entry 'A' that is appropraite in the above case.
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