On January 2, 20X0, Parent Company Purchased 100% of Sub

question 88

Essay

On January 2, 20X0, Parent Company purchased 100% of Sub Company's stock for $900,000 cash. At this date, the book value of Sub Company's net assets (i.e., assets less liabilities) was $800,000 which included property, plant and equipment that have a book value of $400,000 and a market value of $440,000. Required:
A. Prepare the journal entry that would appear on the books of each company at the acquisition date.
B. How much goodwill should P arent Company recognize on the consolidated financial statements at the date of acquisition?

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