Reference no: EM133188561
Question - On January 1, 2015, Pomegranate Company acquired 90% of the voting stock of Starfruit Company for $60,400,000 in cash. The fair value of the noncontrolling interest in Starfruit at the date of acquisition was $4,400,000. Starfruit's book value was $12,200,000 at the date of acquisition. Starfruit's assets and liabilities were reported on its books at values approximating fair value, except its plant and equipment (10-year life, straight-line) was overvalued by $24,000,000. Starfruit Company had previously unreported intangible assets, with a market value of $35,000,000 and 5-year life, straight-line, which were capitalized following GAAP.
Now assume Pomegranate paid only $15,000,000 to acquire 90% of Starfruit. The fair value of the noncontrolling interest at the date of acquisition was $2,000,000. On the 2017 consolidation working paper, what the eliminating entry (R) debits goodwill?