Use the following information to answer the question(s)below.
Paris Corporation purchased 80% of the outstanding voting common stock of Sanders Corporation on January 1,2011,at a cost of $400,000.The stockholders' equity of Sanders Corporation on this date consisted of $200,000 of Capital Stock and $100,000 of Retained Earnings.Book values were equal to fair values except for land and inventory.The book value of Sanders' land was $10,000,and fair value was $22,000.The book value of Sanders' inventory was $30,000,and fair value was $25,000.
-Under the parent company theory,what amount of goodwill was reported on the consolidated balance sheet at December 31,2011?

Question

Quizplus · Accepted Answer

C)
Purchase price of 80% interest $400,000
Less: Book value acquired ($300,000 × 80%)240,000
Excess of cost over book value $160,000
Less: Excess allocated to land ($12,000 × 80%)(9,600)
Plus: Excess allocated to inventory ($5,000 × 80%)4,000
Remainder allocated to goodwill $154,400

Use the Following Information to Answer the Question(s)below