On January 1, Coldwater Company has a net book value of $2,174,000 as follows:

2,000 shares of preferred stock; par value $100 per share;

cumulative, nonparticipating, nonvoting;

call value $108 per share …………………………………………………….. $ 200,000

34,500 shares of common stock; par value $40 per share ………. 1,380,000

Retained earnings……………………………………………………………… 594,000

Total…………………………………………………………………………………$ 2,174,000

Westmont Company acquires all outstanding preferred shares for $214,000 and 60 percent of the common stock for $1,253,280. The acquisition-date fair value of the noncontrolling interest in Coldwater’s common stock was $835,520. Westmont believed that one of Coldwater’s buildings, with a 12-year remaining life, was undervalued by $63,600 on the company’s financial records.

What amount of consolidated goodwill would be recognized from this acquisition?

a. $61,600.

b. $65,200.

c. $60,400.

d. $59,200.



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