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Using the IFRS alternative method of valuing the noncontrolling interest, what amount of goodwill is reported at the date of acquisition? Select one: O a. $9,120,000 O b. $6,600,000 O c. $5,610,000 O d. $4,050,000

Using the IFRS alternative method of valuing the noncontrolling interest, what amount of goodwill is reported at the date of acquisition? Select one: O a. $9,120,000 O b. $6,600,000 O c. $5,610,000 O d. $4,050,000

FINANCIAL ACCOUNTING
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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On January 1, 2022, Pronto Company acquired 80 percent of Speedy Inc.'s voting stock for $11,850,000. The fair value of the 20 percent noncontrolling interest was $2,550,000. Speedy's net assets were reported at amounts approximating book value, but Pronto determined that Speedy had the following previously unreported intangible assets: • Developed technology, fair value $1,200,000, 5-year life Favorable leases, fair value $600,000, 4-year life Speedy's shareholders' equity on January 1, 2022, was $6,000,000. It is now December 31, 2023 (two years later). Speedy reported net income of $480,000 in 2022. There are no impairments of identifiable intangibles or goodwill in 2022 or 2023. Pronto uses the complete equity method to report its investment in Speedy on its own books. Speedy's December 31, 2023, trial balance appears below. Current assets Property and equipment, net Liabilities Capital stock Retained earnings, January 1 Sales revenue Cost of goods sold Operating expenses Select one: O a. $9,120,000 b. $6,600,000 c. $5,610,000 d. $4,050,000 Dr (Cr) $12,000,000 30,000,000 (34,800,000) (1,200,000) (5,280,000) (42,000,000) 36,000,000 5,280,000 Using the IFRS alternative method of valuing the noncontrolling interest, what amount of goodwill is reported at the date of acquisition? O $0
Transcribed Image Text:On January 1, 2022, Pronto Company acquired 80 percent of Speedy Inc.'s voting stock for $11,850,000. The fair value of the 20 percent noncontrolling interest was $2,550,000. Speedy's net assets were reported at amounts approximating book value, but Pronto determined that Speedy had the following previously unreported intangible assets: • Developed technology, fair value $1,200,000, 5-year life Favorable leases, fair value $600,000, 4-year life Speedy's shareholders' equity on January 1, 2022, was $6,000,000. It is now December 31, 2023 (two years later). Speedy reported net income of $480,000 in 2022. There are no impairments of identifiable intangibles or goodwill in 2022 or 2023. Pronto uses the complete equity method to report its investment in Speedy on its own books. Speedy's December 31, 2023, trial balance appears below. Current assets Property and equipment, net Liabilities Capital stock Retained earnings, January 1 Sales revenue Cost of goods sold Operating expenses Select one: O a. $9,120,000 b. $6,600,000 c. $5,610,000 d. $4,050,000 Dr (Cr) $12,000,000 30,000,000 (34,800,000) (1,200,000) (5,280,000) (42,000,000) 36,000,000 5,280,000 Using the IFRS alternative method of valuing the noncontrolling interest, what amount of goodwill is reported at the date of acquisition? O $0
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