Hepner Corporation has the following stockholders\' equity accounts Preferred st

Question

Hepner Corporation has the following stockholders' equity accounts Preferred stock (5% cumulative dividend) Common stock Additional paid-in capital Retained earnings $ 550,000 800,000 350,000 1,000,000 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 noncontrolling 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? Goodwil

Explanation / Answer

Godwill     5,00,000 Explanation Consideration transferred for common stock 16,50,000 Consideration transferred for preferred stock     6,50,000 Noncontrolling interest in common stock     5,50,000 Noncontrolling interest in preferred stock     3,50,000 Hepner’s acquisition-date fair value 32,00,000 Book value of Hepner 27,00,000 Goodwill     5,00,000

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