Reference no: EM132555729
On October 1, 2019, KTL Inc. acquired 80% of the voting shares of CIK Inc. (CIK had 10,000 outstanding shares on the acquisition date) for $90,000 cash. On that day, CIK balances showed that it had $130,000 fair value and $98,000 carrying value for its net assets.
Required:
Question 1) If the management of KTL would like to use the entity theory, what is the NCI for the consolidated balance sheet at t=0?
Question 2) If the management of KTL would like to use the entity theory, what is the goodwill at t=0?
Question 3) If the management of KTL would like to use the parent company extension theory, what is the NCI for the consolidated balance sheet at t=0?
Question 4) If the management of KTL would like to use the parent company extension theory, what is the goodwill at t=0?
Question 5) What is the difference in total acquisition differential between the two theories (entity vs. parent company extension theory)?
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