4. On 1/1/2016 Choco acquired control over Cake by purchasing 70% of its outstanding common stock and 80% of its preferred stock (nonvoting, cumulative). Cake owns land undervalued in its financial statement by $120,000 (all other assets and liabilities have fair value = book value). Choco paid $700,000 for common stock and $80,000 for preferred stock. On 1/1/2016, 30% of NCI in common shares have a fair value of $300,000 and 20% of preferred stock NCI has a fair value of $20,000. Following table is the stockholders equity part of Cakes Balance sheet on 1/1/2016. Common stock ($1 par, 70,000 shares outstanding) $70,000 Preferred stock 20% cumulative ($1 par, 8,000 shares outstanding) 8,000 Additional paid in capital 554,000 Retained earnings 200,000 Total stockholders equity $832,000 a. What is the total fair value of Cake on 1/1/2016? b. Any excess amount of fair value over book value will be allocated to undervalued land and goodwill. How much is the goodwill? c. Prepare consolidation entry S and A combined. d. Cake reported $30,000 earnings in 2016 and paid entire earnings as a dividend. How much dividends will Choco and NCI receive from their preferred and common stocks?

Common stock ($1 par, 70,000 shares outstanding)	$70,000
Preferred stock 20% cumulative ($1 par, 8,000 shares outstanding)	8,000
Additional paid in capital	554,000
Retained earnings	200,000
Total stockholders equity	$832,000

What is the total fair value of Cake on 1/1/2016?

Any excess amount of fair value over book value will be allocated to undervalued land and goodwill. How much is the goodwill?

Prepare consolidation entry S and A combined.

Cake reported $30,000 earnings in 2016 and paid entire earnings as a dividend. How much dividends will Choco and NCI receive from their preferred and common stocks?