Perch Co Acquired 80% of the Common Stock of Float Corp

question 36

Multiple Choice

Perch Co. acquired 80% of the common stock of Float Corp. for $1,600,000. The fair value of Float's net assets was $1,850,000, and the book value was $1,500,000. The non-controlling interest shares of Float Corp. are not actively traded.
What amount of goodwill should be attributed to Perch at the date of acquisition?

• A) $150,000.
• B) $250,000.
• C) $0.
• D) $120,000.
• E) $170,000.

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Definitions:

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance, determining the account's increase direction.

Financial Statement

Reports that summarize a company's financial performance, status, and cash flows over a specified period.

Permanent/Temporary

A classification that distinguishes between actions or objects that are intended to last indefinitely (permanent) and those expected to change or conclude after a certain period (temporary).

Normal Balance

The side of the accounting equation (debit or credit) where increases in the account are recorded.