On January 1, 2017, Astrakan Company acquires 80% of the outstanding common stock of Gobi, Inc....

On January 1, 2017, Astrakan Company acquires 80% of the outstanding common stock of Gobi, Inc. for a purchase price of $970,000. It was determined that the fair value of the non-controlling interest in the subsidiary is $240,000. The book value of the Gobi’s stockholders’ equity on the date of acquisition is $700,000 and its fair value of net assets is $1,100,000. The acquisition-date acquisition accounting premium (AAP) is allocated $250,000 to equipment with a remaining useful life of 10 years, and $150,000 to a patent with a remaining useful life of 6 years.

Determine the total goodwill to be recognized at acquisition date.

a. $102,500

b. $100,000

c. $110,000

d. $-0-

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Expert Solution

Solution
All Amount in $

Astrakan Purchased 80% of the Outstanding Common Stock of Gobi
Purchase Consideration	9,70,000

Fair value of Non Controlling Interest	2,40,000
Share of Non Controlling Interest	20%

Fair value of net assets	240000/20*100
Fair value of net assets	12,00,000

Favir Value of Controlling Interest
Share	80%
Fair value of net assets	12,00,000
Favir Value of Controlling Interest	1200000*80/100

Fair value	9,60,000

Fair value of net assets	-10,000

hence Goodwill	10,000

The Fair value as per the above question is not in the list.

ekkarill92 answered 1 year ago

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