Question - The Krause Corporation acquired 80 percent of the 100,000 outstanding voting shares of Leahy, Inc., for $6.80 per share on January 1, 2012. The remaining 20 percent of Leahy's shares also traded actively at $6.80 per share before and after Krause's acquisition. An appraisal made on that date determined that all book values appropriately reflected the fair values of Leahy's underlying accounts except that a building with a 5-year life was undervalued by $84,000 and a fully amortized trademark with an estimated 10-year remaining life had a $81,000 fair value. At the acquisition date, Leahy reported common stock of $100,000 and a retained earnings balance of $254,000.
Following are the separate financial statements for the year ending December 31, 2013:
|
Krause
Corporation
|
Leahy, Inc.
|
|
Sales
|
$(751,000)
|
$(409,250)
|
|
Cost of goods sold
|
249,000
|
177,000
|
|
Operating expenses
|
287,000
|
128,250
|
|
Dividend income
|
(16,000
|
0
|
|
Net income
|
$(231,000)
|
$(104,000)
|
|
Retained earnings, 1/1/13
|
$(753,000)
|
$(324,000
|
|
Net income (above)
|
(231,000
|
(104,000)
|
|
Dividends paid
|
80,000
|
20,000
|
|
Retained earnings, 12/31/13
|
$(904,000)
|
$(408,000)
|
|
Current assets
|
$147,000
|
$186,000
|
|
Investment in Leahy, Inc.
|
544,000
|
0
|
|
Buildings and equipment (net)
|
900,000
|
405,000
|
|
Trademarks
|
147,000
|
145,000
|
|
Total assets
|
$1,738,000
|
$736,000
|
|
Liabilities
|
$(514,000)
|
$(228,000)
|
|
Common stock
|
(320,000)
|
(100,000)
|
|
Retained earnings, 12/31/13 (above)
|
(904,000)
|
(408,000)
|
|
Total liabilities and equities
|
$(1,738,000)
|
$(736,000)
|
Note: Parentheses indicate a credit balance.
If instead the noncontrolling interest shares of Leahy had traded for $5.19 surrounding Krause's acquisition date, what is the impact on goodwill?