Reference no: EM132557106

Parent Inc. purchased 40,000 voting shares out of Subsidiary Inc.'s 50,000 outstanding voting shares for $300,000 on January 1, 2018. On the date of acquisition, Subsidiary's common shares and retained earnings were valued at $120,000 and $180,000, respectively. Subsidiary book values approximated its fair values on the acquisition date with the exception of a patent and a trademark, neither of which had been previously recorded. The fair values of the patent and trademark on the date of acquisition were $30,000 and $20,000 respectively.

On January 2, 2018, Parent sold 6,000 shares of Subsidiary on the open market for $46,000.

Question a) What is the amount of goodwill arising from this business combination?

Question b) What would be the balance in the investment in Subsidiary Inc. accounts after the sale?

Question c) What would be the amount of the gain or loss on the sale of the 6,000 shares?