The financial statements for Goodwin, Inc, and Corr Company for the year ended December 31, 2018, prior to the business combination whereby Goodwin acquired Corr, are as follows (in thousands):

On December 31, 2018, Goodwin obtained a loan for $600 and used the proceeds, along with the transfer of 30 shares of its $10 par value common stock, in exchange for all of Corr's common stock. At the time of the transaction, Goodwin's common stock had a fair value of $40 per share.

In connection with the business combination, Goodwin paid $25 to a broker for arranging for the transaction and $35 in stock issuance cost. At the time of the transaction, Corr's equipment was actually worth $1,400 but its buildings were only valued at $560.

1) Compute the consolidated common stock account at December 31, 2018.

A) $1,380

B) $2,680

C) $1,080

D) $2,280

E) $1,480

2) Compute the consolidated retained earnings at December 31, 2018.

A) $2,800

B) $2,825

C) $3,450

D) $3,425

E) $2,850

3) Compute the consolidated additional paid-in capital at December 31, 2018.

A) $1,350

B) $2,910

C) $810

D) $1,675

E) $1,875

4) Compute the goodwill arising from the acquistion at December 31, 2018.

A) $12

B) $160

C) $45

D) $0

E) $100

Transcribed Image Text:

Revenues Expenses Net income Retained earnings, 1/1 Net income Dividends Retained earnings, 12/31 Cash Receivables and inventory Buildings (net) Equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings SS $ $ $ SS Goodwin 2,700 1,980 720 2,400 720 (270 2,850 240 1,200 2,700 2,100 6,240 1,500 1,080 810 2,850 is Total liabilities and stockholders' equity $ ) 6,240 $ $ SS Corr 600 400 200 400 200 (0 600 220 340 600 1,200 2,360 820 400 540 600 $ 2,360 Revenues Expenses Net income Retained earnings, 1/1 Net income Dividends Retained earnings, 12/31 Cash Receivables and inventory Buildings (net) Equipment (net) Total assets Liabilities Common stock Additional paid-in capital Retained earnings SS $ $ $ SS Goodwin 2,700 1,980 720 2,400 720 (270 2,850 240 1,200 2,700 2,100 6,240 1,500 1,080 810 2,850 is Total liabilities and stockholders' equity $ ) 6,240 $ $ SS Corr 600 400 200 400 200 (0 600 220 340 600 1,200 2,360 820 400 540 600 $ 2,360

Answer rating: 100% (QA)

1 Consolidated common stock 1080400 1480 2 consolidate... View the full answer