Exercise 1 Bai Company bought 60% of the outstanding preferred shares of Six Company for $6,500,000 and 70% of its common shares traded for $35,000,000 on January 1, 2012. The shareholders' equity of Six on December 31, 2011 includes the following (in thousands) 10,000 Preferred stock $10, par value $100. cumulative non- participating dividend, callable at 105 per share 30,000 Ordinary shares $10 par value 5.000 Share premium (paid-in capital) 15,000 Retained earnings 60,000 Total equity Determine the fair value / book value difference (goodwill) of Bai's investments in the common stock of Six Total equity=60,000 Less BV preferred = 10000*105%=(10500) BV common = 49500 FV = 35,000 / 70% = 50000 Goodwill = 500