PAR Inc. Inc. purchased 90% of the outstanding voting shares of SUB Inc. for $90,000 on January 1, 2021. Fair value versus carrying value differences were identified as follows: Jan 1, 2021 SUB Inc. carrying value fair value Cash $5,000 $5,000 Accounts Receivable $30,000 $30,000 Inventory $30,000 $50,000 Equipment (net) $25,000 $20,000 Land $20,000 $30,000 Trademark $10,000 $18,000 Total Assets $120,000 $153,000 Liabilities $70,000 $70,000 Common Shares $30,000 Retained Earnings $20,000 Total Liabilities and Equity $120,000 The equipment had a remaining useful life of 10 years from the date of acquisition. SUB's trademark is estimated to have a remaining life of 5 years from the date of acquisition. Assume INSTEAD that PAR has chosen to use the fair value enterprise method but value the non-controlling interest in SUB using the market value of the shares on acquisition date (rather than linear) which would value the non-controlling interest at $8,500. - Calculate at acquisition date the Goodwill AND show the composition of Goodwill that is the parent’s versus the NCI’s share.
PAR Inc. Inc. purchased 90% of the outstanding voting shares of SUB Inc. for $90,000 on January 1, 2021.
Fair value versus carrying value differences were identified as follows:
|
Jan 1, 2021 |
SUB Inc. |
|
|
|
carrying value |
fair value |
|
Cash |
$5,000 |
$5,000 |
|
Accounts Receivable |
$30,000 |
$30,000 |
|
Inventory |
$30,000 |
$50,000 |
|
Equipment (net) |
$25,000 |
$20,000 |
|
Land |
$20,000 |
$30,000 |
|
Trademark |
$10,000 |
$18,000 |
|
Total Assets |
$120,000 |
$153,000 |
|
Liabilities |
$70,000 |
$70,000 |
|
Common Shares |
$30,000 |
|
|
|
$20,000 |
|
|
Total Liabilities and Equity |
$120,000 |
The equipment had a remaining useful life of 10 years from the date of acquisition. SUB's trademark is estimated to have a remaining life of 5 years from the date of acquisition.
Assume INSTEAD that PAR has chosen to use the fair value enterprise method but value the non-controlling interest in SUB using the market value of the shares on acquisition date (rather than linear) which would value the non-controlling interest at $8,500.
- Calculate at acquisition date the
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