50) Book Value Fair Market Value Cash 75,000 62,000 A/R 900,000 890,000 Patents

Question

50)                                           Book Value                             Fair Market Value

Cash                                        75,000                                     62,000

A/R                                         900,000                                   890,000

Patents                                    10,000                                     399,000

A/P                                          16,000                                     16,000

Bonds Payable                          250,000                                   250,000

Price paid for Yellow Corporation 1,977,000

Calculate Goodwill, second number

A)Number=> 0 or 1

B)Number=> 2 or 3

C)Number=> 4 or 5

D)Number=> 6 or 7

E)Number=> 8 or 9

Explanation / Answer

Assets at fair market value= $62000+890000+399000= $1351000

Liabilities=$250000+16000=$266000

Net Assets=$1085000

Net assets= Assets- liabilities

Goodwill= Purchas consideration- net assets

= $1977000-1085000=$892000

B number =>2 or 3

19770000/8920000=2.2

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