Tre Corporations stockholders equity at December 31 consisted of the following (in thousands): Capital stock, $10 par,

Question:

Tre Corporation’s stockholders’ equity at December 31 consisted of the following (in thousands):

Capital stock, $10 par, 60,000 shares issued and outstanding $ 600

Additional paid-in capital 150

Retained earnings 250

Total stockholders’ equity $1,000

On January 1, 2011, Bow Corporation purchased 20,000 previously unissued shares of Tre stock directly from Tre for $500,000.

REQUIRED

1. Calculate Bow Corporation’s percentage ownership in Tre.

2. Determine the goodwill from Bow’s investment in Tre. Assume the book value of all identifiable assets and liabilities equals the fair value.

Goodwill
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