On January 1, 2018, Lime acquired 80,000 common shares of Stones for $900,000. On that day, Stone's balance sheet showed the following shareholders' equity: $ 2 Cumulative preferred shares, 20,000 shares issued $120,000

Common stock, 100,000 shares issued $500,000

Retained Earnings $50,000

Total Equity $670,000

* Stone's preferred share dividends were two years in arrears on that date.

Stone's Fair Values approximated its book values on that date with the following exceptions: Inventory had a fair value that was $30,000 higher than its book value. Plant and equipment had a fair value $10,000 lower than their book value. The plant and equipment had an estimated remaining useful life of 10 years from the date of acquisition.

Required: Compute the amount of Goodwill on the date of the acquisition.

1. Allocation of equity between common stock and preferred stock: (5)

Particulars	Total	Preference shares	Common Stock
Pref. shares
Arrear Dividends
Common Stock
Total
Retained Earnings
Total and allocated