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Purchasaed Goodwill

At the start of the current year, SBC Corp. purchased 30% of Sky Tech Inc. for $45 million. At the time of purchase, the carrying value of Sky Tech's net assets was $75 million. The fair market value of Sky Tech's depreciable assets was $15 million in excess of their book value. For this year, Sky Tech reported a net income of $75 million and declared and paid $15 million in dividends.

10. (1) The amount of purchased goodwill is:

A. $18 million.
B. $30 million.
C. $60 million.
D. None of these is correct.

Solution Preview

The book value of net assets is $75 million
The fair value ...

Solution Summary

The solution explains the correct alternative in respect of purchased goodwill

$2.19