The following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2021: Penske Stanza Revenues $ (816,000 ) $ (724,000 ) Cost of goods sold 290,600 181,000 Depreciation expense 163,000 368,000 Investment income Not given 0 Dividends declared 80,000 60,000 Retained earnings, 1/1/21 (700,000 ) (216,000 ) Current assets 460,000 550,000 Copyrights 950,000 447,000 Royalty agreements 662,000 1,122,000 Investment in Stanza Not given 0 Liabilities (554,000 ) (1,508,000 ) Common stock (600,000 ) ($20 par) (200,000 ) ($10 par) Additional paid-in capital (150,000 ) (80,000 ) Note: Parentheses indicate a credit balance. On January 1, 2021, Penske acquired all of Stanza’s outstanding stock for $790,000 fair value in cash and common stock. Penske also paid $10,000 in stock issuance costs. At the date of acquisition, copyrights (with a six-year remaining life) have a $520,000 book value but a fair value of $700,000. As of December 31, 2021, what is the consolidated balance to be reported for goodwill?

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter2: Financial Statements And The Annual Report

Section: Chapter Questions

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The following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2021:

	Penske			Stanza
Revenues	$	(816,000	)		$	(724,000	)
Cost of goods sold		290,600				181,000
Depreciation expense		163,000				368,000
Investment income		Not given				0
Dividends declared		80,000				60,000
Retained earnings, 1/1/21		(700,000	)			(216,000	)
Current assets		460,000				550,000
Copyrights		950,000				447,000
Royalty agreements		662,000				1,122,000
Investment in Stanza		Not given				0
Liabilities		(554,000	)			(1,508,000	)
Common stock		(600,000	)	($20 par)		(200,000	)	($10 par)
Additional paid-in capital		(150,000	)			(80,000	)

Note: Parentheses indicate a credit balance.

On January 1, 2021, Penske acquired all of Stanza’s outstanding stock for $790,000 fair value in cash and common stock. Penske also paid $10,000 in stock issuance costs. At the date of acquisition, copyrights (with a six-year remaining life) have a $520,000 book value but a fair value of $700,000.