Chapter 6, Problem 17P

On January 1, Coldwater Company has a net book value of $2,174,000 as follows:

2,000 shares of preferred stock; par value $100 per share; cumulative, nonparticipating, nonvoting; call value $108 per share	$ 200,000
34,500 shares of common stock; par value $40 per share	1,380,000
Retained earnings	594,000
Total	$2,174,000

  Westmont Company acquires all outstanding preferred shares for $214,000 and 60 percent of the common stock for $1,253,280. The acquisition-date fair value of the noncontrolling interest in Coldwater’s common stock was $835,520. Westmont believed that one of Coldwater’s buildings, with a 12-year remaining life, was undervalued by $63,600 on the company’s financial records.

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

1. a. $61,600
2. b. $65,200
3. c. $60,400
4. d. $59,200