Explore BrainMass
Share

Explore BrainMass

    Investor Accounting and Reporting

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Plum Corporation paid $700,000 for a 40% interest in Satin Company on January 1, 2011 when Plum's stockholders' equity was as follows:

    10% cumulative preferred stock, $100 par $ 500,000
    Common stock, $10 par value 300,000
    Other paid-in capital 400,000
    Retained earnings 800,000
    Total stockholders' equity $2,000,000

    On this date, the book values of Plum's assets and liabilities equaled their fair values and there were no dividends in arrears.

    Required: Calculate the amount recorded in the Investment in Satin Company and the amount of implied Goodwill in this transaction.

    © BrainMass Inc. brainmass.com October 10, 2019, 6:59 am ad1c9bdddf
    https://brainmass.com/business/accounting-standards/investor-accounting-reporting-563559

    Solution Preview

    Cost of Satin investment
    (amount recorded in the
    Investment account): $700,000 ...

    Solution Summary

    The expert calculates the amount recorded in the Investment and the amount of implied Goodwill in this transaction.

    $2.19