Summer Company holds assets with a fair value of $124,000 and a book value of $96,000 and liabilities with a book value and fair value of $23,000. Required: Compute the following amounts if Parade Corporation acquires 65 percent ownership of Summer: What amount did Parade pay for the shares if no goodwill and no gain on a bargain purchase are reported? What amount did Parade pay for the shares if the fair value of the noncontrolling interest at acquisition is $48,650 and goodwill of $38,000 is reported? What balance will be assigned to the noncontrolling interest in the consolidated balance sheet if Parade pays $82, 550 to acquire its ownership and goodwill of $26,000 is reported?

Summer Company holds assets with a fair value of $124,000 and a book value of $96,000 and liabilities with a book value and fair value of $23,000. Required: Compute the following amounts if Parade Corporation acquires 65 percent ownership of Summer: What amount did Parade pay for the shares if no goodwill and no gain on a bargain purchase are reported? What amount did Parade pay for the shares if the fair value of the noncontrolling interest at acquisition is $48,650 and goodwill of $38,000 is reported? What balance will be assigned to the noncontrolling interest in the consolidated balance sheet if Parade pays $82, 550 to acquire its ownership and goodwill of $26,000 is reported?

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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Question

Summer Company holds assets with a fair value of $124,000 and a book value of $96,000 and liabilities
with a book value and fair value of $23,000. Required: Compute the following amounts if Parade
Corporation acquires 65 percent ownership of Summer: What amount did Parade pay for the shares if no
goodwill and no gain on a bargain purchase are reported? What amount did Parade pay for the shares if
the fair value of the noncontrolling interest at acquisition is $48,650 and goodwill of $38,000 is reported?
What balance will be assigned to the noncontrolling interest in the consolidated balance sheet if Parade
pays $82,550 to acquire its ownership and goodwill of $26,000 is reported?

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Step 1: Define what is consolidation.

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Step 2: 1. Compute the purchase price of acquisition.

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Step 3: Calculate the value of purchase.

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Step 4: 3. Calculate the amount assigned to non-controlling interest.

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