On January $1,2024,$ the Moody Company entered into a transaction for $100\%$ of the

outstanding common stock of Osorio Company. To acquire these shares, Moody issued $$400$

in long$-$term liabilities and also issued $40$ shares of common stock having a par value of $$1$

per share but a fair value of $$10$ per share. Moody paid $$20$ to lawyers, accountants, and

brokers for assistance in bringing about this acquisition. Another $$15$ was paid in connection

with stock issuance costs. Prior to these transactions, the balance sheets for the two

companies were as follows:

Cash

Receivables

Inventories

Land

Buildings $($net$)$

Equipment $($net$)$

Accounts payable

Long$-$term liabilities

Common stock $($$$1$ par$)$

Common stock $($$$20$ par$)$

Moody

Additional paid$-$in capital

Retained earnings

Note: Parentheses indicate a credit balance.

In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the

subsidiary's books: Inventory by $$10,$ Land by $$40,$ and Buildings by $$60.$

What is the amount of goodwill arising from this acquisition?

A$)$ $$230$

B$)$ $$120$

C$)$ $$520$

D$)$ None. There is a gain on bargain purchase of $$230.$

E$)$ None. There is a gain on bargain purchase of $$265.$

Initial consideration $=4020=800$

$\frac{720}{120}$

ion $1$