question archive QUESTION 1: If you know that Cyprus Company acquired 90 percent of the outstanding shares of Star Company by paying $400,000 in cash
QUESTION 1: If you know that Cyprus Company acquired 90 percent of the outstanding shares of Star Company by paying $400,000 in cash
Subject:AccountingPrice:2.84 Bought3
QUESTION 1: If you know that Cyprus Company acquired 90 percent of the outstanding shares of Star Company by paying $400,000 in cash. The fair value of star identifiable assets is $320,000, and the liabilities is $40,000. Determine the amount of good w?ll/ gain on bargain purchase
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Answeer: Goodwill = $148000
Workings:
Fair value of purchase consideration = $400000
Fair value of net assets = Fair value of (Assets - Liabilities)
= $320000 - $40000 = $280000
Fair value of non controlling interest(10%) = $280000*10% = 28000
Goodwill/gain on bargain purchase = (Fair value of purchase consideration + Fair value of non controlling interest) - (Fair value of net assets)
= ($400000 + $28000) - $280000
Goodwill = $148000
