Hepner Corporation has the following stockholders’ equity accounts:
Preferred stock (6% cumulative dividend) | $ | 750,000 |
Common stock | 1,000,000 | |
Additional paid-in capital | 550,000 | |
Retained earnings | 1,200,000 | |
The preferred stock is participating. Wasatch Corporation buys 80 percent of this common stock for $1,880,000 and 70 percent of the preferred stock for $910,000. The acquisition-date fair value of the noncontrolling interest in the common shares was $470,000 and was $390,000 for the preferred shares. All of the subsidiary’s assets and liabilities are viewed as having fair values equal to their book values.
What amount is attributed to goodwill on the date of acquisition?
Ans: Amount that is attributed to goodwill on the date of Acquisition
Particulars | Amount($) |
Consideration i.e. Transferred to Common Stock | 1,880,000 |
Consideration transferred for Preferred Stock | 910,000 |
Non Controlling Interest in Common Stock | 470,000 |
Non controlling Interest in Preferred Stock | 390,000 |
Hepner Acquisition date-fair Value | 3,650,000 |
Book Value of Hepner {Stockholder Equity Accounts Balance} | (3,500,000) |
Amount that is attributed to Goodwill | 150,000 |
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