Goodwill

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

Cash	$59,000		Current liabilities	$51,000
Accounts receivable	68,000		Bonds payable	183,000
Inventory	120,000		Common stock	235,000
Property, plant, and equipment (net)	600,000		Retained earnings	378,000
	$847,000			$847,000

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

1. No allowance for uncollectible accounts has been established. An allowance of $5,700 is considered appropriate.
2. The LIFO inventory method has been used. The FIFO inventory method would be used if EKC were purchased by Mills. The FIFO inventory valuation of the December 31, 2019, ending inventory would be $182,000.
3. The fair value of the property, plant, and equipment (net) is $750,000.
4. The company has an unrecorded patent that is worth $100,000.
5. The book values of the current liabilities and bonds payable are the same as their market values.

		Goodwill
		Mills Company is considering purchasing EKC Company. EKC's balance sheet at December 31, 2019, is as follows:
		DATA
		Cash		$59,000	Current liabilities	$51,000
		Accounts receivable		68,000	Bonds payable	183,000
		Inventory		120,000	Common stock	235,000
		Property, plant, and equipment (net)		600,000	Retained earnings	378,000
				$847,000		$847,000
		At December 31,2019, Mills discovered the following about EKC:
		a.	No allowance for uncollectible accounts has been established.
			Appropriate allowance			$5,700
		b.	The LIFO inventory method has been used. The FIFO inventory method would be used if EKC were purchased by Mills
			FIFO ending inventory valuation, December 31, 2019			$182,000
		c.	Fair value of the property, plant, and equipment (net)			$750,000
		d.	Worth of the company's unrecorded patent			$100,000
		e.	The book values of the current liabilities and bonds payable are the same as their market values.
		Amount paid for EKC				$1,369,300
REQUIRED:
Compute the value of the goodwill.
Using formulas and cell references from the problem data, perform the required analysis. Formula entered in the green cell shows in the orange cell. Transfer amount to CNOWv2 for grading.
		Amount	Formula
Goodwill value

Required:

1. Compute the value of the goodwill if Mills pays $1,369,300 for EKC.

$ fill in the blank 2

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

All of the choices are correct.