Chase Ltd. purchased 60% of Latham Ltd. for $1,500,000. At the date of acquisition, the carrying value of Latham's net identifiable assets was $1,800,000 and the fair value was $2,200,000 after accounting for the tax effect. The fair value of the NCI at that date is $1,000,000. What is the amount of the goodwill under the full goodwill method?
A)$300,000.
B)$(300,000).
C)$120,000.
D)$400,000.

Question

Quizplus · Accepted Answer

The amount of goodwill under the full goodwill method is the excess of the purchase price over the fair value of the net identifiable assets acquired. In this case, the purchase price is $1,500,000, the fair value of the net identifiable assets acquired is $2,200,000, and the fair value of the NCI is $1,000,000. Therefore, the amount of goodwill is $1,500,000 - ($2,200,000 x 60%) - $1,000,000 = $300,000.

Chase Ltd Purchased 60% of Latham Ltd