Parent and Sub Inc. had the following balance sheets on December 31, 2012: On January 1, 2013 Parent purchased all of Sub Inc.'s Common Shares for $40,000 in cash. On that date, Sub's Current Assets and Fixed Assets were worth $26,000 and $54,000, respectively. Assuming that Consolidated Financial Statements were prepared on that date, answer the following: The Goodwill arising from this Business Combination would be:
A) ($17,000).
B) $7,000.
C) $17,000.
D) $120,000.

Question

Parent and Sub Inc. had the following balance sheets on December 31, 2012:  On January 1, 2013 Parent purchased all of Sub Inc.'s Common Shares for $40,000 in cash. On that date, Sub's Current Assets and Fixed Assets were worth $26,000 and $54,000, respectively. Assuming that Consolidated Financial Statements were prepared on that date, answer the following: The Goodwill arising from this Business Combination would be:
A) ($17,000). 
B) $7,000. 
C) $17,000. 
D) $120,000.

Quizplus · Accepted Answer

The Answer is B