Skipen Corp. Had the Following Stockholders' Equity Accounts

question 14

Essay

Skipen Corp. had the following stockholders' equity accounts:

The preferred stock was participating and is therefore considered to be equity. Vestin Corp. acquired 90% of this common stock for $2,250,000 and 70% of the preferred stock for $1,120,000. All of the subsidiary's assets and liabilities were determined to have fair values equal to their book values except for land which is undervalued by $130,000.
Required:
What amount was attributed to goodwill on the date of acquisition?

---

Definitions:

Buyer's Confidence

The level of trust and assurance a potential buyer has in the value and legitimacy of a product or service.

Assembly Line

A manufacturing process in which parts are added to a product in a sequential manner to create a finished product efficiently.

Product Knowledge

Product knowledge is the understanding of features, benefits, and uses of a product, crucial for effective sales and marketing.

Company's Assembly Line

A production process where components are sequentially assembled to efficiently produce a final product.