What is the GOODWILL arising from the consolidation if The fair value of the 25% non controlling interest in Subsidiary Company is P890,000? Parent Company acquires 15% of Subsidiary Company's ordinary shares forP500,000 cash and carries the investment using the equity method. A fewmonths later, Parent purchases another 60% of Subsidiary's ordinary shares forP2,160,000. At that date, Subsidiary Company reports identifiable assets with abook value of P3,900,000 and a fair value of P5,100,000, and it has liabilitieswith a book value and fair value of P1,900,000.

Consolidated financial statements are the financial statements in which the assets, liabilities,…

Answered: What is the GOODWILL arising from the…

What is the GOODWILL arising from the consolidation if The fair value of the 25% non controlling interest in Subsidiary Company is P890,000?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

What is the GOODWILL arising from the consolidation if The fair value of the 25% non controlling interest in Subsidiary Company is P890,000?

Parent Company acquires 15% of Subsidiary Company's ordinary shares for
P500,000 cash and carries the investment using the equity method. A few
months later, Parent purchases another 60% of Subsidiary's ordinary shares for
P2,160,000. At that date, Subsidiary Company reports identifiable assets with a
book value of P3,900,000 and a fair value of P5,100,000, and it has liabilities
with a book value and fair value of P1,900,000.

Definition Definition Intangible asset that includes proprietary or intellectual property and brand value of a firm. Goodwill is recorded in the books when a firm purchases another firm and the purchase price is more than the fair value of net identifiable assets of the acquired business. The amount of goodwill is recorded on the asset side of the balance sheet (statement of financial position).

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