Amie, Inc., has 135,000 shares of $3 par value stock outstanding. Prairie Corporation acquired 40,500 of...
Amie, Inc., has 135,000 shares of $3 par value stock outstanding. Prairie Corporation acquired 40,500 of Amie’s shares on January 1, 2015, for $243,000 when Amie’s net assets had a total fair value of $667,650. On July 1, 2018, Prairie bought an additional 81,000 shares of Amie from a single stockholder for $8 per share. Although Amie’s shares were selling in the $7 range around July 1, 2018, Prairie forecasted that obtaining control of Amie would produce significant revenue synergies to justify the premium price paid. If Amie’s identifiable net assets had a fair value of $950,250 at July 1, 2018, how much goodwill should Prairie report in its postcombination consolidated balance sheet?
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$75,750.
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$94,500.
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$0
-
$129,750.
Homework Answers
| Answer | |
| The correct option is A : $ 75,750 | |
| Explanation | |
|
30% previously owned fair value (40500*$7) |
$ 283,500 |
| 60% new shares acquired (81000*8) | $ 648,000 |
| 10% NCI fair value (13500*7) | $ 94,500 |
| Acquisition-date fair value | $ 1,026,000 |
| Net assets' fair value | $ 950,250 |
| Goodwill | $ 75,750 |
| Therefor , | |
| The correct option is A : $ 75,750 | |
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