Use the following information to answer the question(s)below.
On January 1,2011,Pardy Corporation acquired a 70% interest in the common stock of Salter Corporation for $7,000,000 when Salter's stockholders' equity was as follows:
There were no preferred dividends in arrears on January 1,2011.There are no book value/fair value differentials.
-What is the implied goodwill for Salter based on Pardy's purchase price for Salter on January 1,2011?

Question

Use the following information to answer the question(s)below.
On January 1,2011,Pardy Corporation acquired a 70% interest in the common stock of Salter Corporation for $7,000,000 when Salter's stockholders' equity was as follows:
  There were no preferred dividends in arrears on January 1,2011.There are no book value/fair value differentials.
-What is the implied goodwill for Salter based on Pardy's purchase price for Salter on January 1,2011?

Quizplus · Accepted Answer

D)
Stockholders' equity $11,000,000
Less: Preferred stockholders' equity (10,000 × $110)1,100,000
Common stockholders' equity 9,900,000
Cost of 70% interest acquired $7,000,000
Implied fair value of investment ($7,000,000/0.7)10,000,000
Common stockholders' equity 9,900,000
Goodwill $100,000

Use the Following Information to Answer the Question(s)below