On January 1, 2011, Bast Co Fisher Co Acquired All of the Outstanding Preferred Shares for $148,000

question 102

Essay

On January 1, 2011, Bast Co. had a net book value of $2,100,000 as follows: $$\begin{array} { | l | r | } \hline \begin{array} { l } \text { Preferred stock, 2,000 shares } \$ 70 \text { par value, } \\\text { cumulative, nonparticipating, nonvoting }\end{array} & \$ 140,000 \\\hline \text { Common stock, 22,400 shares } \$ 50 \text { par value } & 1,120,000 \\\hline \text { Retained earnings } & 840,000 \\\hline \text { Total shareholders' equity } & \$ 2,100,000 \\\hline & \\\hline\end{array}$$
Fisher Co. acquired all of the outstanding preferred shares for $148,000 and 60% of the common stock for $1,281,000. Fisher believed that one of Bast's buildings, with a twelve-year life, was undervalued on the company's financial records by $70,000.
Required:
What is the amount of goodwill to be recognized from this purchase?

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Definitions:

Service Recovery

The actions a company takes to correct a problem that a customer has encountered with its service, aimed at restoring customer satisfaction.

Customer Service

The direct interaction between a consumer making a purchase and a representative of the company that is selling it.

Order Management

The process of tracking and fulfilling sales orders, involving the stages from order receipt, processing, packaging, to shipment and delivery.

Phases

Distinct stages or steps in a process or project, each with its specific objectives and activities.