Reference no: EM131997387
Question - On January 1, 2009, Nichols Company acquired 80% of Smith Company's common stock and 40% of its non-voting, cumulative preferred stock. The consideration transferred by Nichols was $1,200,000 for the common and $124,000 for the preferred. Any excess acquisition-date fair value over book value is considered goodwill. The capital structure of Smith immediately prior to the acquisition is:
Common Stock, $10 par value (50,000 shares outstanding) = 500,000
Preferred Stock, 6% cumulative, $100 par (3,000 shares outstanding) = 300,000
Additional Paid-In Capital = 200,000
Retained Earnings = 500,000
Total Stockholders Equity = 1,500,000
(A) Compute the goodwill recognized in consolidation.
(B) Computer the non-controlling interest in Smith at the date of acquisition.
(C) If Smith's net income is $100,000 in the year following the acquisition, what is the non-controlling interest balance.
Please show every step of calculations.
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