On January 2, Year 1 Parent Company paid $1,200,000 for 100% of the voting common stock of Sub Corp. At the time of the investment, Sub Corp had net assets with a book value of $800,000 and fair value of $1,000,000. The fair value increase is attributable to the building and will be amortized over 10 years. During year 1, Sub earned net income of $100,000 and paid dividends of $20,000. Any excess cost over fair value is attributable to goodwill with an indefinite life. What is the amount of goodwill from Parent's investment in Sub? O $200,000 O $400,000 O$1,200,000 O $20,000 QUESTION 2 What is the balance in Parent's investment account at December 31, Year 1? O$1,260,000 O $1,200,000 O $1,340,000 O$1,280,000

On January 2, Year 1 Parent Company paid $1,200,000 for 100% of the voting common stock of Sub Corp. At the time of the investment, Sub Corp had net assets with a book value of $800,000 and fair value of $1,000,000. The fair value increase is attributable to the building and will be amortized over 10 years. During year 1, Sub earned net income of $100,000 and paid dividends of $20,000. Any excess cost over fair value is attributable to goodwill with an indefinite life. What is the amount of goodwill from Parent's investment in Sub? O $200,000 O $400,000 O$1,200,000 O $20,000 QUESTION 2 What is the balance in Parent's investment account at December 31, Year 1? O$1,260,000 O $1,200,000 O $1,340,000 O$1,280,000

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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

On January 2, Year 1 Parent Company paid $1,200,000 for 100% of the voting common stock of Sub Corp. At the time of the investment, Sub Corp had net
assets with a book value of $800,000 and fair value of $1,000,000. The fair value increase is attributable to the building and will be amortized over 10
years. During year 1, Sub earned net income of $100,000 and paid dividends of $20,000. Any excess cost over fair value is attributable to goodwill with an
indefinite life. What is the amount of goodwill from Parent's investment in Sub?
O $200,000
O $400,000
O $1,200,000
O $20,000
QUESTION 2
What is the balance in Parent's investment account at December 31, Year 1?
O $1,260,000
O $1,200,000
O $1,340,000
O $1,280,000

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