Question 1

Acquirer Inc. purchases 80% of Target Co. for $800,000 cash. The fair value of the Non-Controlling Interest (NCI) is estimated at $180,000. Target Co.'s net identifiable assets have a book value of $600,000 and a fair value of $900,000.

What amount of Goodwill should be reported in the consolidated balance sheet?

Accepted Answer

Full Goodwill Method (US GAAP): (Consideration Paid + FV of NCI) - FV of Net Identifiable Assets.

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Using book value of assets; ignoring NCI.

How to approach this question

Full Answer

Common mistakes

Practice the full CPA BAR Practice Exam 4

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