On January 1, 2015, ChocoNichols Company acquired 80% of AllieSmith Company\'s c
ID: 2479886 • Letter: O
Question
On January 1, 2015, ChocoNichols Company acquired 80% of AllieSmith Company's common stock and 60% of its non-voting, cumulative preferred stock. The consideration transferred by Choco was $1,500,000 for the common and $450,000 for the preferred. Any excess acquisition-date fair value over book value is considered goodwill.
The capital structure of Allie immediately prior to the acquisition is:
Common stock, $1 par value (800,000 shares outstanding) -- $800,000
Preferred stock, 5% cumulative, $10 par value, 40,000 shares outstanding - $400,000
Additional paid in capital - $600,000
Retained earnings - $700,000
Total stockholders’ equity - $2,500,000
a. Compute the goodwill recognized in consolidation.
b. Compute the non-controlling interest in Allie at date of acquisition. (10 points)
Please show all work
Common stock, $1 par value (800,000 shares outstanding) -- $800,000
Explanation / Answer
common stock 800000 80% 640000 additional paid in capital 600000 80% 480000 retained earnings 700000 80% 560000 preferred stock 400000 60% 240000 total value of controlled interest 1920000 value paid 1950000 goodwill 30000 non controlling interest common stock 800000 20% 160000 additional paid in capital 600000 20% 120000 retained earnings 700000 20% 140000 preferred stock 400000 40% 160000 total value of non controlling interest 580000
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