The consolidated worksheet shows Excess of Cost Over Book Value of Subsidiary of $210,000. Management of the parent company determines that the market values for subsidiary company plant assets are $90,000 higher than book values. In the consolidated statement of financial position, goodwill will be reported at

Question

Quizplus · Accepted Answer

Goodwill is calculated as the excess of cost over the fair value of net identifiable assets acquired. In this case, the excess of cost over book value of subsidiary is $210,000 and the fair value of net identifiable assets is $90,000 higher than book value. Therefore, the goodwill will be calculated as follows:

Excess of Cost Over Book Value of Subsidiary = $210,000
Fair Value Adjustment of Plant Assets = $90,000
Goodwill = Excess of Cost Over Fair Value of Net Identifiable Assets
= $210,000 - $90,000
= $120,000

Therefore, the correct answer is B) $120,000.

The Consolidated Worksheet Shows Excess of Cost Over Book Value