On January 1, 2015, ChocoNichols Company acquired 80% of AllieSmith Company\'s c
ID: 2480560 • 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 share outstanding) $800,000
Preferred stock 5% cumulative, $10 par value
40,000 400,000
Additional paid in capital 600,000
Retained Earnings 700,000
Total stockholders' equity $2,500,000
a. Compute the goodwill recognized in consolidation.
b. Compute the non-controlling interest in Allie at date of acquisition.
a. Compute the goodwill recognized in consolidation.
b. Compute the non-controlling interest in Allie at date of acquisition
Explanation / Answer
Non controlling interest Amount ($) Preferred stock (40% of $400000) 160000 20% of equity to common stockholders (20% of (2500000-400000) 420000 Total 580000 Calculation of goodwill: Amount ($) Fair value of net assets 2500000 Less: Minority interest 580000 Net assets acquired 1920000 Less: purchase consideration (1500000+450000) 1950000 Goodwill 30000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.