On 2009 January 1, Company J acquired 85 percent of the outstanding voting common stock of Company K. On that date, Company K”s stockholders” equity consisted of:
|
Stockholders” equity: |
|
|
Paid-in capital: |
|
|
Common stock, $90 par; 30,000 shares authorized, issued, and outstanding |
$2,700,000 |
|
Retained earnings |
675,000 |
|
Total stockholders” equity |
$3,375,000 |
Compute the difference between cost and book value in each of the following cases:
a. Company J pays USD 2,868,750 cash for its interest in Company K.
b. Company J pays USD 3,375,000 cash for its interest in Company K.
c. Company J pays USD 2,610,000 cash for its interest in Company K.