CPA Study Group
Shouldn't the FV of the asset over BV just establish goodwill? Why is this being amortized in this instance?
The excess FV of balance sheet assets over their BV is added as an adjustment to the consolidated balance of that asset as part of the consolidating JE (in this case you would debit equipment for $100k in year one). This excess is depreciated over 10 years, which is why you would add $90k to the second year BV amounts. This balance sheet adjustment would continue to be made until the FV equals the BV. There is not enough information to calculate goodwill, if there is any. To find goodwill, you would need to know the purchase price and if there were any intangible assets acquired.