FINANCE : GOODWILL DETERMINATION

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  1. 5.      Determination of Goodwill

Suppose the investment in Tar Sands, Development was $340,000 instead of $300,000 as stated.  The fair market values of Tar Sands’ assets and liabilities were equal to their book values.  Would the consolidated income differ?  How? Be as specific as possible.  Would the consolidated balance sheet differ?  How? Be as specific as possible.

 

 

 

 

 

BC mining (Parent)

Tar Sands Development (subsidiary)

Balance sheets, December 31, 20X0

 

 

Assets

$1,000,000 

$550,000 

Liabilities to creditors

$400,000 

$250,000 

Stockholders' equity

600,000

300,000

Total liabilities and stockholders' equity

$1,000,000 

$550,000 

Income statement for 20X1

 

 

Revenue and other income

$5,450,000 

$1,100,000 

Expenses

5,100,000

950,000

Net Income

$350,000 

$150,000 

 

 

 

 

    • 7 years ago