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Consolidated Goodwill

On January 1, 2004, Mitchell Company has a net book value of $1,500,000 as follows:

1,000 shares of preferred stock; par value $100 per share, cumulative, non participative, non-voting, call value $108 per share........................................................................$100,000

20,000 shares of common stock, par value $40 per share....$800,000
Retained earnings................................................... ...$600,000
Total............................................................... ......$1,500,000

Andrews Company acquires all of the outstanding preferred shares for $106,000 and 60 percent of the common stock for $916,400. Andrews believed that one of Mitchell's buildings, with a 12-year
life, was undervalued on the company's financial records by $50,000.

What amount of consolidated goodwill would be recognized from this purchase?

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The amount of goodwill would be:
Excess cost of preferred ...

Solution Summary

Consolidated goodwill is calculated.

$2.19