contestada

On October 1, 20X3, Pole Corporation paid $450,000 for all of Stick Company's outstanding common stock. On that date, the book values and fair values of Stick's recorded assets and liabilities were as follows: Book Value Fair Value Cash and Receivables $ 75,000 $ 75,000 Inventory 155,000 160,000 Buildings and Equipment (net) 260,000 320,000 Liabilities (150,000 ) (150,000 ) Net Assets $ 340,000 $ 405,000 Based on the preceding information, what amount should be allocated to goodwill in the consolidated balance sheet prepared immediately after the combination?
Multiple Choice
$110,000.
$65,000.
$45,000.
$0.

Respuesta :

Option (c) is correct.

The word "goodwill" refers to that intangible asset that comes into play only when a company is about to buy another company and is willing to pay a price that is higher than the fair market value of the company's assets. Simply put, goodwill can be seen as the difference between the purchase price and the fair market value of the company's tangible assets and liabilities.

The Goodwill formula calculates the value of the goodwill by subtracting the fair value of net identifiable assets of the company to be purchased from the total purchase price; the fair value of net identifiable assets is calculated by deducting the fair value of the net liabilities from the sum of the fair value of all the assets.

Goodwill can be given as follows:

= Consideration paid - Fair value of net assets received

Putting values from the given information, we get:

= 450,000 - 405,000

= 45,000

Hence, amount should be allocated to goodwill in the consolidated balance sheet prepared immediately after the combination is  Rs.45000.

For more such questions on goodwill:

https://brainly.com/question/29658929

#SPJ4

Otras preguntas