On October 31, 2006, Portugal Corporation acquired 80% of the outstanding common stock of Spain Company in a business combination. Total cost of the investment, including direct out-of-pocket costs, was $480,000. The working paper elimination (in journal entry format, explanation omitted) for Portugal Corporation and Subsidiary on October 31, 2006, was as follows: If goodwill had been computed based on the implied current fair value of the subsidiary's total net assets, the debit to Goodwill-Portugal in the foregoing working paper elimination would have been:

Question

On October 31, 2006, Portugal Corporation acquired 80% of the outstanding common stock of Spain Company in a business combination. Total cost of the investment, including direct out-of-pocket costs, was $480,000. The working paper elimination (in journal entry format, explanation omitted) for Portugal Corporation and Subsidiary on October 31, 2006, was as follows:  If goodwill had been computed based on the implied current fair value of the subsidiary's total net assets, the debit to Goodwill-Portugal in the foregoing working paper elimination would have been:

Quizplus · Accepted Answer

Rationale: [($480,000 ÷ 0.80) - $450,000 = $150,000]

On October 31, 2006, Portugal Corporation Acquired 80% of the Outstanding