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hepner corporation has the following stockholders equity accounts. Preferred stock 7% cumulative dividends 530,000. common stock...

hepner corporation has the following stockholders equity accounts. Preferred stock 7% cumulative dividends 530,000. common stock 780,000. additional paid in capital 330,000. retained earnings 980,000. The preferred stock is participating. Wasatch corporation buys 75 percent of this common stock for $1,650,000 and 65 percent of the preferred stock for $650,000. The acquisition date fair value of the non controlling interest in the common shares was $550,000 and was $350,000 for the preferred shares. All of the subsidiary's assets and liabilities are viewed as having fair values equal to their book values. What amount is attributed to goodwill on the date of acquisition?

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Answer #1

ANSWER

In balance sheet equity along with liabilities is equal to total book value of assets.

So the book value of assets as on acquisition date = 530,000+ 780,000+ 330,000+ 980,000= $2,620,000.

Goodwill Calculation:

Fair value of consideration = 1,650,000 + 650,000= $2,300,000

Add: Non controlling interest = 550,000 + 350,000 = $900,000

Total = $3,200,000

Less: Fair value of net identifiable assets = ($2,620,000)

Goodwill = $580,000

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