Problem (you must show your work for this problem, as well as answer the multiple choice question):
On January 1, 2004, Cobb Enterprises acquired 80% of Bob's Bricks Inc.'s outstanding common shares. In acquiring this interest, Cobb paid a total of $3,000,000. Bob Bricks' net assets had a book value of $2,600,000 at the time. A building with a 10 year life and a book value of $200,000 was worth $350,000. Any other excess amount was attributed to goodwill. Cobb reports net income for 2004 of $700,000 (without regard for its ownership in Bob's Bricks), while Bob's Bricks has $350,000 in earnings. For each of the three following concepts, what is the amount of goodwill?
Economic Proportionate Parent
Unit Consolidation Company
Concept Concept Concept
a. $1,030,000 $770,000 $1,000,000
b. $1,000,000 $800,000 $800,000
c. $1,550,000 $770,000 $770,000
d. $800,000 $800,000 $1,030,000
e. $1,000,000 $250,000 $800,000