Question #2: (Marks: 5+4+2+4=15) On January 1, 2018, Lime acquired 80,000 common shares of Stone's for $900,000. On that day, Stone's balance sheet showed the following shareholders' equity: $ 2 Cumulative preferred shares, 20,000 shares issued Common stock, 100,000 shares issued Retained Earnings Total Equity $120,000 $500,000 $50,000 $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 Pref. shares Arrear Dividends Common Stock Total Retained Earnings Total and allocated Total Preference shares Common Stock