On January 1, 2019, Pippen Co. issued 50,000 shares of its $1 par value common stock (market price per share was $10) and transfer $250,000 in cash to purchase all of the outstanding shares of common stock of Scottie Co.

As part of the acquisition agreement (1) Pippen contracted with the selling Scottie Co. stockholders to pay (on May 1, 2020) additional $40,000 in cash if 2019 consolidated revenue is greater than $900,000. On January 1, 2019, the fair value of this provision is $25,000 and (2) Pippen was obligated to replace the share based payment awards held by Scottie's employee. On January 1, 2019, Pippen issued to Scottie's employees 10,000 share options with a total fair value of $20,000. Pippen determined that 40% of the replacement award is attributable to the pre-combination services that have already been rendered by the employees, while the remaining 60% of the replacement award is attributable services to be rendered by the employees over the next 4 years.

The following costs in relation to the acquisition were incurred and paid by Pippen on 1/1/2019:

Printer's and underwriting fees in relation to the common stock issued of $5,000 and

Finder's and financial due diligence fees of $7,000.

The book values of Scottie assets and liabilities equal their fair values except for

Inventory - fair value of $40,000

Equipment - fair value of $90,000

Customer list - fair value of $160,000

Notes payable - fair value of $80,000

Below are the January 1, 2019, balance sheets of Pippen Co. and Scottie Co. before all the journal entries in respect to this acquisition were recorded by Pippen.

Balance sheet

Pippen

Scottie

Cash

$400,000 Pippen

$100,000 Scottie

Accounts receivable

27,000 Pippen

125,000 Scottie

Inventory

20,000 Pippen

45,000 Scottie

Property and Equipment

315,000 Pippen

70,000 Scottie

Customer list

100,000 Pippen

-Scottie

Patents

38,000 Pippen

160,000 Scottie

Total assets

$900,000 Pippen

$500,000 Scottie

Accounts payable

80,000 Pippen

65,000 Scottie

Notes payable

150,000 Pippen

50,000 Scottie

Bonds payable

145,000 Pippen

100,000 Scottie

Retained earnings

165,000 Pippen

115,000 Scottie

Common stock ($1 par)

120,000 Pippen

60,000 Scottie

Additional paid-in capital

240,000 Pippen

110,000 Scottie

Liabilities and Equity

$900,000 Pippen

$500,000 Scottie

(4) Calculate the goodwill recognized on the acquisition day.