Reference no: EM132565552
Question - The board of directors of Banking Enterprises, Inc., a holding company with 25 subsidiary federally chartered banks, has offered $2,500,000 to Mary Phillips, the 40% minority stockholder of Bank of Provence, for the entire 40% interest, which has a carrying amount of $1,800,000 in the consolidated balance sheet of Banking Enterprises, Inc. and subsidiaries. In a discussion of the appropriate accounting for the $700,000 difference between the amount offered and the carrying amount, Banking's chief financial officer, Wendell Casey, supports recognition of goodwill. However, controller John Winston of Banking Enterprises, Inc., believes that some of the $700,000represents a greenmail-type loss, and should be recognized as such. In an appearance before Banking"s board, both Casey and Winston argue their positions forcefully. The board instructs the two men to consult with the engagement partner of Banking"s independent auditing firm, Crandall & Lowe, CPAs, to resolve the matter.
Instructions - Assume you are the above-described partner of Crandall & Lowe, CPAs. How would you resolve the dispute between Wendell Casey and John Winston? Explain, including mention of the additional information you would need.
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