Giles Company buys 100 percent of the outstanding stock of Henrico Company for $1,300,000.Henrico Company has contributed capital of $840,000 and retained earnings of $360,000.The fair market value of Henrico's identifiable net assets was equal to their book value on the date of acquisition.The consolidated financial statements would contain

Question

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Since Giles Company acquired 100% of Henrico Company, there is no minority interest. The purchase price exceeds the book value of Henrico's net assets ($1,300,000 - ($840,000 + $360,000) = $100,000), indicating the presence of goodwill.

Giles Company Buys 100 Percent of the Outstanding Stock of Henrico