Reference no: EM131837125

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?