On January 1, Tesco Company spent a total of $4,384,000 to acquire control over Blondel Company. This price was based on paying $424,000 for 20 percent of Blondel’s preferred stock and $3,960,000 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 $440,000. The fair value of the 80 percent of Blondel’s preferred shares not owned by Tesco was $1,696,000. 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 |
3,000,000 |
|
Total stockholders’ equity |
$6,000,000 |
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?
a. $300,000.
b. $316,000.
c. $364,000.
d. $520,000.