question archive Huang Inc has 50,000 shares of $3 par value stock outstanding
Huang Inc has 50,000 shares of $3 par value stock outstanding
Subject:AccountingPrice:2.87 Bought7
Huang Inc has 50,000 shares of $3 par value stock outstanding. Ouyang Inc acquired 10,000 of Huang's shares on Jan 1, 20X1, for $100,000 when Huang's net assets had a total fair value of $400,000. On July 1, 20x1, Ouyang bought an additional 20,000 shares for $12 per share. Although Huang's shares were selling in the $11 range around July 1, 20X1. If Huang's identifiable net assets had fair value of $550,000 at July 1, 20x1,
how much goodwill should Ouyang Report in the consolidated statement?
$150,000
$60,000
$40,000
$30,000
$20,000
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Answer: (A) $ 150,000
Since the Goodwill is being calculated for Ouyang and not for Huang so the net change in the assets will be considered for the calaculation of goodwill.
Now Goodwill = June asset 20X1 - January asset 20X1
= $ 550,000 - $ 400,000
= $ 150,000
So, the total goodwill recognised by ouyang is $ 150,000
