AB Inc, acquired 100% stake in CD Inc. on January 1, 2013. AB paid $564,000 cash for the acquisition. On that date, the book value of the net assets of CD was $360,000. However, these net assets were overvalued by $100,000. How much goodwill to be recognized in relation to this acquisition?

AB Inc, acquired 100% stake in CD Inc. on January 1, 2013. AB paid $564,000 cash for the acquisition. On that date, the book value of the net assets of CD was $360,000. However, these net assets were overvalued by $100,000. How much goodwill to be recognized in relation to this acquisition?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 30E

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