Page Company Purchased an 80% Interest in the Common Stock

question 40

Multiple Choice

Page Company purchased an 80% interest in the common stock of the Seed Company for $600,000 on January 1, 2019, when Seed Company had the following stockholders' equity:
$$\begin{array} { l r } \text { Common stock, } \$ 10 \text { par } & \$ 300,000 \\\text { Cumulative preferred stock, } 10 \% , \$ 10 \text { par } & 100,000 \\\text { Paid-in capital in excess of par, common } & 50,000 \\\text { Retained earnings } & 200,000\end{array}$$ Any excess of cost over book value on the common stock purchase was attributed to goodwill.Page does not hold any of Seed's preferred stock.Seed had net income of $40,000 during 2019 and paid no dividends.

The preferred stock is one year in arrears on January 1, 2019.The goodwill that will appear on the consolidated balance sheet prepared on January 1, 2019, is ____.

• A)$80,000
• B)$88,000
• C)$210,000
• D)$168,000

---

Definitions:

Data Visualization

The representation of data in a visual context, such as charts or graphs, to help people understand the significance of data.

Simplicity

Simplicity denotes the quality of being easily understood or performed, often leading to greater effectiveness or user satisfaction.

Decorative Elements

Visual additions or embellishments used in design that may enhance aesthetic appeal but do not contribute to the content's function.

Convention

A widely accepted way of doing something, based on established practices and procedures.