Brown Inc. acquired 75% of the common stock of Allen Co. for $1,800,000. The fair value...

Brown Inc. acquired 75% of the common stock of Allen Co. for $1,800,000. The fair value of Allen's net assets was $2,240,000, and the book value was $1,800,000. The non-controlling interest shares of Allen Corp. are not actively traded and there is no control premium.

What is the total amount of goodwill recognized at the date of acquisition?

A. $120,000.
B. $150,000.
C. $0.
D. $160,000.

What amount of goodwill should be attributed to Brown Inc. at the date of acquisition?

A. $120,000.
B. $150,000.
C. $0.
D. $170,000.

3.What amount of goodwill should be attributed to the non-controlling interest at the date of acquisition?

A. $0.
B. $30,000.
C. $40,000.
D. $120,000.

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Expert Solution

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Brown Inc.
What is the total amount of goodwill recognized at the date of acquisition?
Purchase price for 75%	1,800,000.00
Purchase price for 100%	2,400,000.00
Fair value of Allen's net assets	2,240,000.00
Goodwill recognized	160,000.00	Option D

What amount of goodwill should be attributed to Brown Inc. at the date of acquisition?
Fair value of Allen's net assets	2,240,000.00
75% of Fair value	1,680,000.00
Purchase price	1,800,000.00
Goodwill attributed to Brown	120,000.00	Option A

What amount of goodwill should be attributed to the non-controlling interest at the date of acquisition?
Total Goodwill recognized	160,000.00
Goodwill attributed to Brown	120,000.00
Goodwill attributed to non-controlling interest	40,000.00	Option C

ekkarill92 answered 1 year ago

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