On January 1, Tesco Company spent a total of $4,525,000 to acquire control over Blondel Company. This price was based on paying $475,000 for 20% of Blondel's preferred stock and $4,050,000 for 90% of its outstanding common stock. At the acquisition date, the fair value of the 10% noncontrolling interest in Blondel's common stock was $450,000. The fair value of the 80% of Blondel's preferred shares not owned by Tesco was $1,900,000. Blondel's stockholders' equity accounts on January 1 were as follows: Preferred stock-9%, $100 par value, cumulative and participating; 10,000 shares outstanding $1,000,000 Common stock-$50 par value; 40,000 shares outstanding $2,000,000 Retained earnings $3,510,000 Total stockholders' equity $6,510,000 Tesco believes that all of Blondel's accounts approximate their fair values within the company's financial statements. What amount of consolidated goodwill should be recognized? a. $286,500 b. $840,000 c. $475,000 d. $365,000
On January 1, Tesco Company spent a total of $4,525,000 to acquire control over Blondel Company. This price was based on paying $475,000 for 20% of Blondel's preferred stock and $4,050,000 for 90% of its outstanding common stock. At the acquisition date, the fair value of the 10% noncontrolling interest in Blondel's common stock was $450,000. The fair value of the 80% of Blondel's preferred shares not owned by Tesco was $1,900,000. Blondel's stockholders' equity accounts on January 1 were as follows: Preferred stock-9%, $100 par value, cumulative and participating; 10,000 shares outstanding $1,000,000 Common stock-$50 par value; 40,000 shares outstanding $2,000,000 Retained earnings $3,510,000 Total stockholders' equity $6,510,000 Tesco believes that all of Blondel's accounts approximate their fair values within the company's financial statements. What amount of consolidated goodwill should be recognized? a. $286,500 b. $840,000 c. $475,000 d. $365,000
Chapter8: Consolidated Tax Returns
Section: Chapter Questions
Problem 36P
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Transcribed Image Text:On January 1, Tesco Company spent a total of $4,525,000 to acquire
control over Blondel Company. This price was based on paying $475,000
for 20% of Blondel's preferred stock and $4,050,000 for 90% of its
outstanding common stock. At the acquisition date, the fair value of the
10% noncontrolling interest in Blondel's common stock was $450,000.
The fair value of the 80% of Blondel's preferred shares not owned by
Tesco was $1,900,000. Blondel's stockholders' equity accounts on
January 1 were as follows:
Preferred stock-9%, $100 par value, cumulative and
participating; 10,000 shares outstanding
$1,000,000
Common stock-$50 par value; 40,000 shares outstanding
$2,000,000
Retained earnings
$3,510,000
Total stockholders' equity
$6,510,000
Tesco believes that all of Blondel's accounts approximate their fair values
within the company's financial statements.
What amount of consolidated goodwill should be recognized?
a. $286,500
b. $840,000
c. $475,000
d. $365,000
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