The lifo inventory method has been used the fifo inventory

Reference no: EM13570740

Valman Company is considering purchasing EKC Company. EKC's balance sheet at December 31, 2013, is as follows:

Cash $56,000 Current liabilities $64,000
Accounts receivable 74,000 Bonds payable 214,000
Inventory 100,000 Common stock 250,000
Property, plant, and equipment (net) 560,000 Retained earnings 262,000
$790,000 $790,000

At December 31, 2013, Valman discovered the following about EKC:

No allowance for uncollectible accounts has been established. An allowance of $4,000 is considered appropriate.
The LIFO inventory method has been used. The FIFO inventory method would be used if EKC were purchased by Valman. The FIFO inventory valuation of the December 31, 2013, ending inventory would be $166,000.
The fair value of the property, plant, and equipment (net) is $680,000.
The company has an unrecorded patent that is worth $100,000.
The book values of the current liabilities and bonds payable are the same as their market values.

Required:

1. Compute the value of the goodwill if Valman pays $1,244,000 for EKC.

Reference no: EM13570740

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