E 2-3

Calculate percentage ownership and goodwill on investment acquired directly from investee

The corporations stockholders equity at December 31 2010, consisted of the following (in thousands):

Capital stock, $10 par, 30,000 shares issued and outstanding $300 Additional paid-in capital 75 Retained earnings 125 Total stockholders equity $500

On January 1, 2011, Bow Corporation purchased 10,000 previously unissued shares of Tre stock directly from Tre for $250,000.

REQUIRED 1. Calculate Bow Corporations percentage ownership in Tre. 2. Determine the goodwill from Bows investment in Tre. Assume the book value of all identifiable assets and liabilities equals the fair value.