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    Goodwill on consolidation computation

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    Sunreel Co purchased 80% stake in Codfish Inc on 1st January, 20x0. The purchase amount involved cash of $500,000 with an additional amount, of $40,000 to be paid a year later. As at that date CodFish's share capital is $400,000 with retained earnings of $10,000.

    Excess cash can be invested at 8% as at 1st January 20x0.

    Calculate the goodwill purchased by Sunreel Co

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    Solution Preview

    Goodwill represents the excess of the purchase consideration over the net assets as at the time of purchase. From the ...

    Solution Summary

    The solution set deals with computing the goodwill earned on a business consolidation.