On January 1, 20X8, Ritt Corporation acquired 80 percent of Shaw Corporation’s $10 par common stock for $956,000. On this date, the fair value of the noncontrolling interest was $239,000, and the carrying amount of Shaw’s net assets was $1,000,000.

 On January 1, 20X8, Ritt Corporation acquired 80 percent of Shaw Corporation’s $10 par common stock for $956,000. On this date, the fair value of the noncontrolling interest was $239,000, and the carrying amount of Shaw’s net assets was $1,000,000. The fair values of Shaw’s identifiable assets and liabilities were the same as their carrying amounts except for plant assets (net) with a remaining life of 20 years, which were $100,000 in excess of the carrying amount. For the year ended December 31, 20X8, Shaw had net income of $190,000 and paid cash dividends totaling $125,000. In the January 1, 20X8, consolidated balance sheet, the amount of goodwill reported should be

Multiple Choice

$156,000.


$76,000.


$0.


$95,000. Correct

 
Explanation

$95,000 = ($956,000 + $239,000) − $1,000,000 − $100,000