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On January 2,2010,Parent Company Purchased 100% of Sub Company's Stock

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On January 2,2010,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.
Requirements:
A.Prepare the journal entry that would appear on the books of each company at the acquisition date.
B.How much goodwill should Parent Company recognize on the consolidated financial statements at the date of acquisition?


Definitions:

New Product Introductions

The process of bringing a new product to the market, including development, marketing, and commercialization phases.

Existing Product Improvements

Enhancements made to products already available in the market to increase their value, functionality, or appeal to consumers.

Process Innovation

The adoption of a novel or substantially enhanced method for producing or distributing offerings in business processes.

Assembly Method

A process in manufacturing where parts are put together to make a final product.

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