On January 1, 2009, Mitchell Company has a net book value of $ 1,500,000 as follows: LO4
Question:
On January 1, 2009, Mitchell Company has a net book value of $ 1,500,000 as follows: LO4 1,000 shares of preferred stock; par value $100 per share; cumulative, nonparticipating, nonvoting; call value $108 pershare. $ 100,000 20,000 shares of common stock; par value $40 per share. 800^000 Retained earnings.600 000 Total.$1,500,000 Andrews Company acquires all outstanding preferred shares for $106,000 and 60 percent of the common stock for $916,400. The acquisition-date fair value of the noncontrolling interest in Mitchell’s common stock was $580,000. Andrews believed that one of Mitchell’s buildings, with a 12-year life, was undervalued by $50,000 on the company’s financial records.
What amount of consolidated goodwill would be recognized from this purchase?
a. $50,000.
b. $51,200.
c. $52,400.
d. $56,000.
Step by Step Answer:
Advanced Accounting
ISBN: 9780073379456
9th Edition
Authors: Joe Ben Hoyle, Timothy S. Doupnik, Thomas F. Schaefer, Oe Ben Hoyle