Pop Entity acquires 75,000 of Soda Entity's 100,000 outstanding shares in exchange for $3 million. The fair value of all the net identifiable assets of Soda Entity at acquisition date is $3.5 million. Assuming fair value treatment of the non-controlling interest, should Pop Entity recognize a positive or negative goodwill (i.e., bargain purchase) and how much will this amount be on the consolidated financial statements of Pop Entity.
A) Bargain Purchase of $375,000
B) Bargain Purchase of $500,000
C) Goodwill of $375,000
D) Goodwill of $500,000

Question

Quizplus · Accepted Answer

The Answer of Pop Entity acquires 75,000 of Soda Entity's 100,000 outstanding shares in exchange for $3 million. The fair value of all the net identifiable assets of Soda Entity at acquisition date is $3.5 million. Assuming fair value treatment of the non-controlling interest, should Pop Entity recognize a positive or negative goodwill (i.e., bargain purchase) and how much will this amount be on the consolidated financial statements of Pop Entity.
A) Bargain Purchase of $375,000
B) Bargain Purchase of $500,000
C) Goodwill of $375,000
D) Goodwill of $500,000

Pop Entity Acquires 75,000 of Soda Entity's 100,000 Outstanding Shares