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On January 1, 2013, Pamela Company purchased 75% of the common stock of Snicker Company.Separate balance sheet data for the companies at the combination date are given below: Determine below what the consolidated balance would be for each of the requested accounts on January 2, 2013.
-What amount of goodwill will be reported?
A)($20,000)
B)($25,000)
C)$25,000
D)$0

Question

Use the following information to answer questions 
On January 1, 2013, Pamela Company purchased 75% of the common stock of Snicker Company.Separate balance sheet data for the companies at the combination date are given below:  Determine below what the consolidated balance would be for each of the requested accounts on January 2, 2013.
-What amount of goodwill will be reported?
A)($20,000) 
B)($25,000) 
C)$25,000 
D)$0

Quizplus · Accepted Answer

Goodwill is reported when the purchase price of an acquired company exceeds the fair value of its net identifiable assets. If the purchase price is less than the fair value of net identifiable assets, no goodwill is reported, and a gain on bargain purchase may be recognized instead.

Use the Following Information to Answer Questions