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 balance sheet, goodwill will be reported at

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Goodwill is calculated as excess of cost over fair value of net identifiable assets acquired. In this case, the excess of cost over book value of subsidiary is $210,000. However, the management determines that plant assets of subsidiary have a fair value of $90,000 more than book value. Therefore, net identifiable assets acquired have a fair value of $90,000 which should be deducted from excess of cost over book value. Thus, the goodwill reported in the consolidated balance sheet will be $210,000 - $90,000 = $120,000.

The Consolidated Worksheet Shows Excess of Cost Over Book Value