Pencil Company purchases 80% of the outstanding shares of Eraser Company for P9,000,000. The carrying value of Subsidiary Company's net assets at the time of acquisition was P6,000,000 and had a fair value of P8,000,000.

Pencil Company purchases 80% of the outstanding shares of Eraser Company for P9,000,000. The carrying value of Subsidiary Company's net assets at the time of acquisition was P6,000,000 and had a fair value of P8,000,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

What is the GOODWILL arising from the consolidation if it is to be computed using the proportionate basis or “Partial Goodwill”?

Pencil Company purchases 80% of the outstanding shares of Eraser Company
for P9,000,000. The carrying value of Subsidiary Company's net assets at the
time of acquisition was P6,000,000 and had a fair value of P8,000,000.

Definition Definition Intangible asset that includes proprietary or intellectual property and brand value of a firm. Goodwill is recorded in the books when a firm purchases another firm and the purchase price is more than the fair value of net identifiable assets of the acquired business. The amount of goodwill is recorded on the asset side of the balance sheet (statement of financial position).

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