Pace Corporation acquired 100 percent of Spin Company's common stock on January 1,20X9.Balance sheet data for the two companies immediately following the acquisition follows:
At the date of the business combination,the book values of Spin's net assets and liabilities approximated fair value except for inventory,which had a fair value of $60,000,and land,which had a fair value of $50,000.The fair value of land for Pace Corporation was estimated at $80,000 immediately prior to the acquisition.
-Based on the preceding information,what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?
A)$0
B)$21,000
C)$6,000
D)$15,000

Question

Pace Corporation acquired 100 percent of Spin Company's common stock on January 1,20X9.Balance sheet data for the two companies immediately following the acquisition follows:
  At the date of the business combination,the book values of Spin's net assets and liabilities approximated fair value except for inventory,which had a fair value of $60,000,and land,which had a fair value of $50,000.The fair value of land for Pace Corporation was estimated at $80,000 immediately prior to the acquisition.
-Based on the preceding information,what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?
A)$0 
B)$21,000 
C)$6,000 
D)$15,000

Quizplus · Accepted Answer

Goodwill is calculated as the excess of the purchase price over the fair value of the net identifiable assets acquired. Without specific details on the purchase price and the fair value of net assets, the choice of $6,000 is assumed to be the correct calculation based on the given options.

Pace Corporation Acquired 100 Percent of Spin Company's Common Stock