Reference no: EM132681855

Question - Fortuna Company issued 128,000 shares of $1 par stock, with a fair value of $5 per share, for 80% of the outstanding shares of Acappella Company. The firms had the following separate balance sheets prior to the acquisition:

Assets Fortuna Acappella

Current assets $2,100,000 $960,000

Property, plant, and equipment (net) 4,600,000 1,300,000

Goodwill 240,000

Total assets $6,700,000 $2,500,000

Liabilities and Stockholders' Equity

Liabilities $3,000,000 $800,000

Common stock ($1 par) 800,000

Common stock ($5 par) 200,000

Paid-in capital in excess of par 2,200,000 300,000

Retained earnings 700,000 1,200,000

Total liabilities and equity $6,700,000 $2,500,000

Book values equal fair values for the assets and liabilities of Acappella Company, except for the property, plant, and equipment, which has a fair value of $1,400,000. Compute goodwill or gain recognized in the consolidated statements.