Question

Pellew Corp. paid $600,000 for all of the outstanding common stock of Samos Co. in a business combination initiated and completed in December. At that time, Samos had the following condensed balance sheet: Current assets: $80,000 Plant and equipment, net: 760,000 Liabilities: 400,000 Equity: 440,000 The acquisition-date fair value of the plant and equipment was $120,000 more than its carrying amount. The acquisition-date fair values and carrying amounts were equal for all other assets and liabilities. What amount of goodwill, related to Samos’s acquisition, must Pellew report in its December 31 consolidated balance sheet?

Answer 1

$40,000

Step-by-step explanation:

The computation of the goodwill amount is shown below:

= Paid amount + liabilities - current assets - plant and equipment - carrying amount value

= $600,000 + $400,000 - $80,000 - $760,000 - $120,000

= $40,000

This $40,000 indicated the goodwill amount reported in its consolidated balance sheet

All other information which is given is not relevant. Hence, ignored it