Roberts Retires and Is Paid $160,000 Based on an Independent

question 81

Multiple Choice

Roberts retires and is paid $160,000 based on an independent appraisal of the business.If the goodwill method is used, what is the capital balance of Peter?

• A) $ 20,000.
• B) $ 60,000.
• C) $110,000.
• D) $120,000.
• E) $230,000.

---

Definitions:

Noncontrolling Interest

A minority share in a subsidiary that is not enough to exert control, often reflected in the parent company's financial statements as part of equity but separate from the parent's equity.

Consolidated Balance Sheet

A financial statement that combines all the assets, liabilities, and equity of a parent company and its subsidiaries into one document.

Acquisition

The process by which one company purchases most or all of another company's shares to gain control of that company.

Control Premium

An additional amount paid over the current market value of a company when acquiring a controlling interest, reflecting the value of gaining control.