10BE - Intermediate Accounting (Kieso)

Question

Hawthorn Corporation’s adjusted trial balance contained the following accounts at December 31, 2017: Retained Earnings \(120,000, Common Stock \)750,000, Bonds Payable \(100,000, Paid-in Capital in Excess of Par—Common Stock \)200,000, Goodwill \(55,000, Accumulated Other Comprehensive Loss \)150,000, and Noncontrolling Interest $35,000. Prepare the stockholders’ equity section of the balance sheet.

Step-by-Step Solution

Answer

The stockholder’s equity section totals $955,000.

Definition of Goodwill

The intangible asset reported by the company that represents the company’s reputation is known as goodwill. It can be calculated as the excess of the amount received over the fair value of the assets when the business is sold.            

Stockholder’s Equity Section

Particular	Amount $
Common stock	$750,000
Paid-in-capital in excess of par – common stock	200,000
Retained earnings	120,000
Non-controlling interest	35,000
Accumulated other comprehensive loss	(150,000)
Total stockholder’s Equity	$955,000