Question
On January 1, Tesco Company spent a total of $4,144,000 to acquire control over Blondel Company. This price was based on paying $499,000 for 20
On January 1, Tesco Company spent a total of $4,144,000 to acquire control over Blondel Company. This price was based on paying $499,000 for 20 percent of Blondels preferred stock and $3,645,000 for 90 percent of its outstanding common stock. At the acquisition date, the fair value of the 10 percent noncontrolling interest in Blondels common stock was $405,000. The fair value of the 80 percent of Blondels preferred shares not owned by Tesco was $1,996,000. Blondels stockholders equity accounts at January 1 were as follows:
Preferred stock9%, $100 par value, cumulative and participating; 10,000 shares outstanding | $ | 1,000,000 | ||
Common stock$50 par value; 40,000 shares outstanding | 2,000,000 | |||
Retained earnings | 3,140,000 | |||
Total stockholders equity | $ | 6,140,000 | ||
Tesco believes that all of Blondels accounts approximate their fair values within the companys financial statements. What amount of consolidated goodwill should be recognized?
$306,500.
$499,000.
$904,000.
$405,000.
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