Homework Answers
| Ans. | Option 2nd $27 million | ||
| Fair value of assets = Carrying value + $15 million | |||
| $70 + $15 | |||
| $85 million | |||
| SBC Corp. purchased 20% of Sky Tech Inc. so the fair value of net assets | |||
| will be recalculte as follows: | |||
| Fair value of net assets = Fair value * 20% | |||
| $85 * 20% | |||
| $17 million | |||
| *Sky Tech Inc. is the acquired firm so, its assets would be valued at fair market price. | |||
| Goodwill = Purchase consideration - Fair value of net assets | |||
| $44 - $17 | |||
| $27 million | |||
| *Goodwill is the amount which is paid access to the firm's fair value of assets. | |||
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