Answered: What amount of consolidated goodwill…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On January 1, Coldwater Company has a net book value of $1,780,000 as follows:


2,500 shares of preferred stock; par value $100 per share; cumulative, nonparticipating, nonvoting; call value $108 per share	$	250,000
24,500 shares of common stock; par value $40 per share		980,000
Retained earnings		550,000
Total	$	1,780,000

Westmont Company acquires all outstanding preferred shares for $268,800 and 60 percent of the common stock for $972,240. The acquisition-date fair value of the noncontrolling interest in Coldwater’s common stock was $648,160. Westmont believed that one of Coldwater’s buildings, with a 12-year remaining life, was undervalued by $52,200 on the company’s financial records.

What amount of consolidated goodwill would be recognized from this acquisition?

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