Question

Assume that on July 1, 2013, a parent company paid $1,891,000 to purchase a 75% interest in a subsidiary's voting common stock. On that date, the fair value of the 25% interest not purchased by the parent company is $625,000. The acquisition-date fair value of the identifiable net assets of the subsidiary is $2,400,000. What is the amount of goodwill assigned to the controlling and noncontrolling interests, respectively, on the acquisition date

Answer 1

Controlling Interest Goodwill

= Purchase price - Ownership stake in net assets of the subsidiary

= 1,891,000 - (2,400,000 * 75%)

= $91,000

Non-Controlling interest Goodwill

= Fair value of the minority stake - Ownership stake in net assets of subsidairy

= 625,000 - (2,400,000 * 25%)

= $25,000