On january 1, tesco company spent a total of $4,332,000 to acquire control over blondel company. this price was based on paying $471,000 for 20 percent of blondel’s preferred stock and $3,861,000 for 90 percent of its outstanding common stock. at the acquisition date, the fair value of the 10 percent noncontrolling interest in blondel’s common stock was $429,000. the fair value of the 80 percent of blondel’s preferred shares not owned by tesco was $1,884,000. blondel’s stockholders’ equity accounts at january 1 were as follows:

preferred stock—9%, $100 par value, cumulative and participating;

10,000 shares outstanding

$ 1,000,000
common stock—$50 par value; 40,000 shares outstanding 2,000,000
retained earnings 3,370,000

total stockholders’ equity $ 6,370,000

tesco believes that all of blondel’s accounts approximate their fair values within the company’s financial statements. what amount of consolidated goodwill should be recognized?

The consolidated goodwill will be of 275,000

Explanation:

fair value of the controlling interest:

purchased preferred stock:    471,000

purchased common stock: 3,861,000

Total                                      4,332,000

fair value of the non-controlling interest:

fair value of 10%  CS     429,000

fair value of 80%  PS  1,884,000

Total non-controlling  2,313,000

Acquisition-date fair value: 6,645,000

acquisition-date net asset fair value: 6,370,000

goodwill diff: 6,645,000 - 6,370,000 = 275,000

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

mauve company permits employees to occasionally use the copying machine for personal purposes