ACTIVITY 2

Edward Co. paid $1,000,000 to purchase all of Keith Inc.s assets and assumed Keith Inc.s liabilities of $200,000. Shown below is information from Keith Inc.s balance sheet as well as appraised fair values of the assets and liabilities of the company:

Book Value Fair Value

Current Assets $200,000 $200,000

Land $100,000 $300,000

Longterm Assets $400,000 $400,000

ASSETS $700,000 $900,000

Liabilities $200,000 $200,000

Total Equity $500,000

LIAB and EQ $700,000

What amount of Goodwill should Edward record?