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Calculate the goodwill created as a result of acquisition

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Question - At the beginning of the year, Company A purchased 30% of Company B for $80,000. On the acquisition date, the book value of Company B's identifiable net assets was $200,000. The fair value and book value of Company B's assets and liabilities were the same except for Company B's equipment, which had a book value of $25,000 and a fair value of $75,000 on the acquisition date. Company B's equipment is depreciated over ten (10) years using the straight- line method. At the end of the year, Company B reported net income of $100,000 and paid dividends of $60,000.

Required -

A. Calculate the goodwill created as a result of the acquisition?

B. Calculate Company A's income to equity at the end of the year from its investment in Company B?

C. Calculate the investment in Company B that appears on Company A's year-end balance sheet?

Reference no: EM133045613

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