Question

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?

Answer 1

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