On January 1, 1998, Company J acquired \(85 \%\) of the outstanding voting common stock of Company K. On that date, Company K's stockholders' equity consisted of:

Compute the difference between cost and book value in each of the following cases:

a. Company J pays \(\$ 2,868,750\) cash for its interest in Company K.

b. Company J pays \(\$ 3,375,000\) cash for its interest in Company K.

c. Company J pays \(\$ 2,610,000\) cash for its interest in Company K..

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Stockholders' equity: Paid-in capital: Common stock, $90 par; 30,000 shares authorized, issued, and outstanding Retained earnings .... Total stockholders' equity $2,700,000 675,000 $3,375,000