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.