On January 1, 2018, Harrison Corporation spent $2,600,000 to acquire control over Involved, Inc. This price was based on paying $750,000 for 30 percent of Involved's preferred stock, and $1,850,000 for 80 percent of its outstanding common stock. As of the date of the acquisition, Involved's stockholders' equity accounts were as follows: Common stock, $10 par value, 100,000 shares outstanding$1,000,000 Preferred stock, 7% fully participating, $100 par value, 10,000 shares outstanding 1,000,000 Retained Earnings 2,000,000 Total stockholders' equity$4,000,000 ?Assuming Involved's accounts are correctly valued within the company's financial statements, what amount of goodwill should be recognized for the Investment in Involved?
A. $200,000.
B. $(100,000.)
C. $2,112,500.
D. $0.
E. $812,500.
Answer: E
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