Reference no: EM132772221

Parent and Sub Inc. had the following balance sheets on December 31, 2019:

                                                    Parent                        Sub

Current Assets                    $120,000                  $20,000

Fixed Assets (net)             $200,000                  $120,000

Total Assets                      $320,000                 $140,000

Current Liabilities                $ 84,000                $70,000

Bonds Payable                 $ 40,000                   $24,000

Common Shares                  $ 180,000                $24,000

Retained Earnings                $ 16,000                    $22,000

Total Liabilities                   $320,000                     $140,000

and Equity

On January 1, 2020, Parent purchased all of Sub Inc.'s Common Shares for $80,000 in cash. On that date, Sub's Current Assets and Fixed Assets were worth $54,000 and $108,000, respectively. Assuming that Consolidated Financial Statements were prepared on that date, answer the following:

Required:

Problem a) Calculate goodwill and the acquisition differential:

Problem b) Give the journal entry to record Parent's acquisition of Sub?