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If a pencil firm purchased 80% of stylus corporation's stock on January 2, 20x3, for $97,600 in cash, the difference between the acquisition price and fair value of the company acquisition price of goodwill) is $0.
The whole sum of the consideration paid for a corporation's stock company at a specified date is its acquisition price. The acquisition price, however, could vary depending on how the market responds to the transaction because a significant amount (or perhaps all) of the consideration paid could represent the buyer's equity.
An acquisition cost, also known as the acquisition price, is the total cost that a business records on its books for real estate or equipment after adjusting for discounts, incentives, closing expenses, and other essential expenditures, but before sales taxes. The sum required corporation's stock to acquire another business or buy an existing business unit from another company may also be included in an acquisition cost.
the difference between acquisition price and fair value of the company acquired (amount of goodwill) as follows:
Difference = Acquisition price - Fair value of net assets
97,600 - (($50,000-$135,000-$63,000 0x80%). = $0
Therefore, the difference between acquisition price and fair value of the company acquired amount of goodwill) is $0.
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The complete question is
Pencil Company acquired 80 percent of Stylus Corporation’s stock on January 2, 20X3, for $72,000 cash. Summarized balance sheet data for the companies on December 31, 20X2, follow:
Peace Computer Corporation acquired 90 percent of Symbol Software Company’s common stock on January 2, 20X3, by issuing preferred stock with a par value of $6 per share and a market value of $8.10 per share. A total of 10,000 shares of preferred stock was issued. Balance sheet data for the two companies immediately before the business combination are as follows:
Peace Computer
Corporation Symbol Software
Company
Book Value Fair Value Book Value Fair Value
Cash $ 200,000 $ 200,000 $ 50,000 $ 50,000
Other Assets 400,000 400,000 120,000 120,000
Total Debits $ 600,000 $ 170,000
Current Liabilities $ 100,000 100,000 $ 80,000 80,000
Common Stock 300,000 50,000
Retained Earnings 200,000 40,000
Total Credits $ 600,000 $ 170,000
Prepare a consolidated balance sheet immediately following the acquisition.
