Reference no: EM133076710
Question - On January 1, 203.5, Power Company purchases 80% of the outstanding shares of the Spencer Company for $2,500,000 in cash. On that date, Spencer Company had No Par Common Stock of $2,000,000 and Retained Earnings of $1,000,000. On January 1, 20X5, all of Spencer's identifiable assets and liabilities had fair values that were equal to their carrying values except for:
A building that had an estimated FV of $600,000 less that its carrying value; its remaining useful life was estimated to be 10 years; and . A long-term liability with a FV of $500,000 less than its carrying value; the liability matures on December 31, 20X12.
The book value (13le of Building for Power and Spencer at date of acquisition was $1,000,000 and $2,000,000 respectively.
The Elf of Power's Common Shares just before the date of acquisition was $5,000,000.
Required - What amount would Power Company report on its consolidated SFP at date of acquisition for Goodwill under the Full Goodwill Approach?
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