At December 31, 2010, the stockholders' equity of Gost Corporation and its 80%-owned subsidiary, Tree Corporation, are as follows: Common stock, $10 par Retained earnings Totals value Gost $20,000 8,000 $28,000 Tree $12,000 6,000 $18,000 Gost's Investment in Tree is equal to 80 percent of Tree's book value. Tree Corporation issued 225 additional shares of common stock directly to Gost on January 1, 2011 at $18 per share. Required: 1. Compute the balance in Gost's Investment in Tree account on January 1, 2011 after the new investment is recorded. 2. Determine the increase or decrease in goodwill from Gost's new investment in the 225 Tree shares. Use four decimal places for the ownership percentage. Assume the fair values of Tree's assets and liabilities are equal to book values.

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1 Compute the balance in Gosts Investment in Tree account on January 1 2011 after the new investment ... View the full answer