Skipen Corp The Preferred Stock Was Participating and Is Therefore Considered to Preferred

question 16

Essay

Skipen Corp. had the following stockholders' equity accounts: $\begin{array}{lr}\text { Preferred stock ( } 8 \% \text { cumulative dividend) } & \$ 700,000 \\\text { Common stock } & 1,050,000 \\\text { Additional paid-in capital } & 420,000 \\\text { Retained earnings } & 1,330,000\\\text { Total }&\$3,500,000\end{array}$
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?

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Definitions:

Stages of Development

A theoretical framework describing the progression through which societies, economies, or industries evolve over time.

Per Capita Income

A measure of the average income earned per person in a given area or country, calculated by dividing the area's total income by its population.

Manufacturing Sector

The segment of an economy that is involved in the production of goods using labor, machinery, and tools.