On January 1,2010,Chester Inc.acquires 100% of Festus Corp.'s outstanding common stock by exchanging 37,500 shares of Chester's $2 par value common voting stock.On January 1,2010,Chester's voting common stock had a fair value of $40 per share.Festus' voting common shares were selling for $6.50 per share.Festus' balances on the acquisition date,just prior to acquisition are listed below.Chester is accounting for the investment in Festus using the acquisition method.
SHAPE \* MERGEFORMAT

Required:
Compute the value of the Goodwill account on the date of acquisition,1/1/10.

Question

On January 1,2010,Chester Inc.acquires 100% of Festus Corp.'s outstanding common stock by exchanging 37,500 shares of Chester's $2 par value common voting stock.On January 1,2010,Chester's voting common stock had a fair value of $40 per share.Festus' voting common shares were selling for $6.50 per share.Festus' balances on the acquisition date,just prior to acquisition are listed below.Chester is accounting for the investment in Festus using the acquisition method.
SHAPE \* MERGEFORMAT
  
Required:
Compute the value of the Goodwill account on the date of acquisition,1/1/10.

Quizplus · Accepted Answer

The Answer of On January 1,2010,Chester Inc.acquires 100% of Festus Corp.'s outstanding common stock by exchanging 37,500 shares of Chester's $2 par value common voting stock.On January 1,2010,Chester's voting common stock had a fair value of $40 per share.Festus' voting common shares were selling for $6.50 per share.Festus' balances on the acquisition date,just prior to acquisition are listed below.Chester is accounting for the investment in Festus using the acquisition method.
SHAPE \* MERGEFORMAT
  
Required:
Compute the value of the Goodwill account on the date of acquisition,1/1/10.