Reference no: EM132722020
The Balance Sheet figures for Selling Company on December 31, 2019 was as follows:
Assets:
Cash $ 25,000
Accounts receivable 35,000
Inventory 42,000
Property, plant, and equipment, (net) 153,000
Liabilities:
Current liabilities $ 55,000
Common stock 100,000
Retained earnings 100,000
- On the same date the Purchase Company acquired the assets and liabilities of the Selling Company for a purchase price of $400,000.
On that date the fair values of the relevant assets and liabilities of Selling Company were determined as follows:
Cash $25,000
Accounts receivable $35,000
Inventory $122,000
Property, plant, and equipment, (net) $205,000
Patents $18,000
Problem 1: Calculate the goodwill to be recorded by the purchasing company.