S purchases 300,000 shares of Ps 1,000,000 shares of outstanding stock
for $8,000,000
P's Total net worth (book value) was $24,000,000
75% of excess paid by S is due to undervalued depreciable assets
25% of excess paid by S is due to goodwill
P reported net income of $2,800,000
P reported extraordinary losses of $395,000
P paid dividends of $600,000

a) how much did S pay in excess of book?
b) what is S portion of extraordinary loss?
c) what is S portion of P dividend?
d) what is S portion of P undervalued depreciable assets?
e) what is S portion of P goodwill?

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Clarification of Question by aproc84114-ga on 04 Apr 2005 10:34 PDT

these are the answers I have and wanted clarification on them from a researcher..

Parta) 800,00
part b) 30%118,500
part c)180,000
part d) 600,000
part e)200,00

a) the firm's book value is $24 million.  By dividing by the number of
shares outstanding, one million, we determine the book value per share
to be $24.  The price per share paid was $8 million/300,000 shares or
$26.666 per share.  By subtracting $24 from the price paid per share
and multiplying by the number of shares purchased, $300,000, the total
excess paid over book is $800,000.

b) the share is determined by the percentage of ownership.  300,000
shares/1,000,000 shares equals 30% ownership.  30% multiplied by the
extraordinary loss of $395,000 is $118,500.

c) the share is determined by the percentage of ownership.  30%
multiplied by the dividends of $600,000 is $180,000.

d) the share is determined by the excess paid over the book value
multiplied by the percentage of the excess attributed to undervalued
depreciable assets.  $800,000 multiplied by 75% is $600,000.

e) the share is determined by the excess paid over the book value
multiplied by the percentage of the excess attributed to goodwill. 
$800,000 multiplied by 25% is $200,000.

Your tips are appreciated.

Sincerely,

Wonko