Pop Corporation paid $2,548,000 cash for 70 percent of the common stock of Son Corporation on June

Question:

Pop Corporation paid $2,548,000 cash for 70 percent of the common stock of Son Corporation on June 1, 2016. The assets and liabilities of Son were fairly valued, and any fair value/book value differential is goodwill. Data related to the stockholders' equity of Son are as follows:

Stockholders' Equity December 31, 2015

Common stock, $10 par ................................................$2,000,000

Retained earnings ........................................................ 960,000

Total stockholders' equity ..............................................$2,960,000

Income and Dividends-2016

Net income (earned evenly throughout the year) .................... $ 480,000

Dividends (declared and paid in equal

amounts in January, April, July, and October) .................................. 240,000

REQUIRED

1. Determine the following:

a. Goodwill from the investment in Son

b. Pop's income from Son for 2016

c. The Investment in Son account balance at December 31, 2016

2. Prepare the workpaper entries needed to consolidate the financial statements for 2016. Add the preacquisition income to Retained Earnings-Son.

Goodwill
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