4. On October 1, 20X3, Green Corporation paid $450,000 for all of Yellow Company

Question

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

Explanation / Answer

Calculate allocated to goodwill :

so answer is b) $45,000

Purchase price 450000 Less: Fair value of assets (405000) Good will 45000

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