How much goodwill is inherent in the purchase price? Give any required entries for Investor Limited’s books for the above events assuming that the equity method is used. Other than Equity Method, what other method is permitted under ASPE?
Goyard Corp, a privately-owned company, has 31 December year-end. The company has elected to apply ASPE for its financial reporting. On January 1, 2016, Goyard Corp bought 3,000 of the 10,000 outstanding common shares of Investee Inc. for $65,000. Coyard Corp has significant influence. On this date, Investee Inc. had assets and liabilities as follows:
|
As of January 1, 2016 |
||
|
|
Book Value |
Fair Value |
|
Assets not subject to |
$ 54,000 |
$ 65,000 |
|
Assets subject to depreciation (net) |
280,500 |
308,500 |
|
Liabilities |
180,500 |
180,500 |
The difference between book value and fair value were related to land and to equipment (which is estimated to have remaining 5-years of useful life and is depreciated using straight-line method).
At the fiscal year end December 31, 2016, Investee Inc. reported net Income of $50,000, and declared and paid total common dividends of $30,000.
- How much goodwill is inherent in the purchase price?
- Give any required entries for Investor Limited’s books for the above events assuming that the equity method is used.
- Other than Equity Method, what other method is permitted under ASPE?
Please answer all the subparts 1,2,3.if answered within 45mins it would be helpful
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