Pentagon Company acquired 90% of Smoker Company's common stock for $1,300,000 and 40% of its preferred stock for $300,000.On January 1,2016,the date of acquisition,the companies reported the following account balances: The preferred stock is 10%,cumulative,nonparticipating,and has a liquidation value equal to 102% of par value.Dividends were not paid during 2015.During 2016,Smoker Company reported net income of $200,000 and declared and paid cash dividends in the amount of $120,000.
The difference between the implied value of the preferred stock and its book value is:

Question

Pentagon Company acquired 90% of Smoker Company's common stock for $1,300,000 and 40% of its preferred stock for $300,000.On January 1,2016,the date of acquisition,the companies reported the following account balances:  The preferred stock is 10%,cumulative,nonparticipating,and has a liquidation value equal to 102% of par value.Dividends were not paid during 2015.During 2016,Smoker Company reported net income of $200,000 and declared and paid cash dividends in the amount of $120,000.
The difference between the implied value of the preferred stock and its book value is:

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The Answer of Pentagon Company acquired 90% of Smoker Company's common stock for $1,300,000 and 40% of its preferred stock for $300,000.On January 1,2016,the date of acquisition,the companies reported the following account balances:  The preferred stock is 10%,cumulative,nonparticipating,and has a liquidation value equal to 102% of par value.Dividends were not paid during 2015.During 2016,Smoker Company reported net income of $200,000 and declared and paid cash dividends in the amount of $120,000.
The difference between the implied value of the preferred stock and its book value is:

Pentagon Company Acquired 90% of Smoker Company's Common Stock for $1,300,000