Goodwill Birch Company is considering purchasing EKC Company EKC's balance sheet at December 31, 2019, is as follows Cash $50,000 Current liabilities $51,000 Accounts receivable 70,000 Bonds payable 204,000 Inventory 130,000 Common stock 320,000 Property, plant, and equipment (net) 580,000 Retained earnings 255,000 $830,000 $830,000 At December 31, 2019, Birch discovered the following about EKC No allowance for uncollectible accounts has been established An allowance of $4,600 is considered appropriate The LIFO inventory method has been used The FIFO inventory method would be used if EKC were purchased by Birch The FIFO inventory valuation of the December 31, 2019, ending inventory would be $192,000 The fair value of the property, plant, and equipment (net) is $710,000 The company has an unrecorded patent that is worth $100,000 The book values of the current liabilities and bonds payable are the same as their market values Required 1 Compute the value of the goodwill if Birch pays $1,342,400 for EKC $ fill in the blank 1 2 Next Level Why would the book value of a company's identifiable net assets differ from its market value Acquirer paid too much Assets listed on the balance sheet at amounts different from their market value Identifiable intangible assets may be unrecorded or undervalued All of the choices are correct

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Goodwill Birch Company is considering purchasing EKC Company. EKC's balance sheet at December 31, 2019, is as follows: Cash $50,000 Current liabilities $51,000 Accounts receivable

Goodwill

Birch Company is considering purchasing EKC Company. EKC's balance sheet at December 31, 2019, is as follows:

Cash	$50,000	Current liabilities	$51,000
Accounts receivable	70,000	Bonds payable	204,000
Inventory	130,000	Common stock	320,000
Property, plant, and equipment (net)	580,000	Retained earnings	255,000
	$830,000		$830,000

At December 31, 2019, Birch discovered the following about EKC:

No allowance for uncollectible accounts has been established. An allowance of $4,600 is considered appropriate.
The LIFO inventory method has been used. The FIFO inventory method would be used if EKC were purchased by Birch. The FIFO inventory valuation of the December 31, 2019, ending inventory would be $192,000.
The fair value of the property, plant, and equipment (net) is $710,000.
The company has an unrecorded patent that is worth $100,000.
The book values of the current liabilities and bonds payable are the same as their market values.

Required:

1. Compute the value of the goodwill if Birch pays $1,342,400 for EKC.

$ fill in the blank 1

2. Next Level Why would the book value of a company's identifiable net assets differ from its market value?

Acquirer paid too much.Assets listed on the balance sheet at amounts different from their market value.Identifiable intangible assets may be unrecorded or undervalued.All of the choices are correct.