Reference no: EM132588979
ZEBRA Manufacturing Corp. decided to expand further by purchasing the net assets of ART Manufacturing Corp. ART's statement of financial position at December 31, 2020 follows.
ART MANUFACTURING CORP.
Statement of Financial Position
December 31, 2020
Assets Liabilities and Equities
Cash............................................ $ 210,000 Accounts payable......................... $ 325,000
Receivables................................. 450,000 Common shares.............................. 800,000
Inventory..................................... 275,000 Retained earnings........................ 835,000
Plant assets (net)......................... 1,025,000
Total assets................................. $ 1,960,000 Total equities............................. $ 1,960,000
An appraisal, agreed to by both parties, indicated that the fair value of the inventory was $ 320,000 and the fair value of the plant assets was $ 1,225,000. The fair value of the receivables and payables is equal to the amount reported on the balance sheet. The agreed purchase price was $ 3.1 million, and this amount was paid in cash to the owners of ART.
Instructions
Question 1: Calculate the amount of goodwill (if any) implied in the purchase price of $ 3.1 million.
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