Question
Black Company purchased 100 percent of the common shares of White Company by issuing shares of common stock valued at $900,000. Selected accounts from Black's
Black Company purchased 100 percent of the common shares of White Company by issuing shares of common stock valued at $900,000. Selected accounts from Black's balance sheet at the date of combination are as follows:
Inventory | $720,000 |
Building and Equipment (net) | 1,000,000 |
Common Stock | 840,000 |
Retained Earnings | 1,100,000 |
Selected accounts from the balance sheet of White at acquisition are as follows:
Inventory | $200,000 |
Building and Equipment (net) | 900,000 |
Common Stock | 450,000 |
Additional Paid-In Capital | 450,000 |
Retained Earnings | (60,000) |
On the date of purchase, White's inventory and buildings and equipment had fair values of $255,000 and $870,000, respectively.
Based on the information given above, the amount to be reported for goodwill in the consolidated balance sheet immediately after the combination is:
1. | $0 | |
2. | $35,000 | |
3. | $60,000 | |
4. | $5,000 | |
5. | None of the above |
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