Question

n January 1, Coldwater Company has a net book value of $1,683,000 as follows:

1,050 shares of preferred stock; par value $100 per share; cumulative, nonparticipating, nonvoting; call value $108 per share	$	105,000
23,500 shares of common stock; par value $40 per share		940,000
Retained earnings		638,000
Total	$	1,683,000

Westmont Company acquires all outstanding preferred shares for $112,400 and 60 percent of the common stock for $1,009,560. The acquisition-date fair value of the noncontrolling interest in Coldwater’s common stock was $673,040. Westmont believed that one of Coldwater’s buildings, with a 12-year remaining life, was undervalued by $63,000 on the company’s financial records.

What amount of consolidated goodwill would be recognized from this acquisition?

Answer 1

Calculation of amount of consolidated goodwill would be recognized from this acquisition
	$
Consideration transferred for preferred stock	112,400.00
Consideration transferred for common stock	1,009,560.00
Non controlling interest fair value for common	673,040.00
Acquisition-date fair value	1,795,000.00
Acquisition-date book value	(1,683,000.00)
Excess fair over book value	112,000.00
to building (undervalued)	63,000.00
to goodwill	49,000.00