On January 1, 2008, Prior to the Effective Date for Use

question 99

Essay

On January 1, 2008, prior to the effective date for use of the acquisition method, Cranston Inc. reported net assets of $1,064,000, although equipment (with a four-year life) with a book value of $616,000 was worth $700,000. Peak Corp. paid $969,000 on that date for an 80% ownership interest in Cranston. Cranston's stock is not actively traded. Peak still owns its 80% interest in 2011.
-What is the consolidated goodwill balance on January 1, 2011, assuming the purchase method of accounting for business combinations is used?

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Definitions:

Will

A document executed with specific legal formalities that contains a person’s instructions about the disposition of his property at his death.

Transferred

In the context of property or legal rights, refers to the act of moving ownership, authority, or responsibility from one party to another.

Validly Executed

A legal term indicating that a document has been signed and carried out according to the required legal formalities.

Warehouse Receipt

A document that provides proof of ownership of commodities (e.g., goods or merchandise) stored in a warehouse.