Question
On March 1, 2009, Sell-It Inc. was purchased by Buy-It Inc. for $2,950,500 cash. The following balance sheet information is provided by Sell-It Inc. on
On March 1, 2009, Sell-It Inc. was purchased by Buy-It Inc. for $2,950,500 cash. The following balance sheet information is provided by Sell-It Inc. on the date of the acquisition: Inventories $ 1,200,000 Accounts Payable $ 750,000 Building 2,000,000 Notes Payable, long term 825,000 Machinery 500,000 Shareholders equity 2,135,000 Trademarks 10,000 $ 3,710,000 $ 3,710,000 Upon reviewing the fair value of the net assets, all item above reflects the fair value except for the following: The Building has a fair value $280,000 above its book value, the Machinery has a fair value $20,000 below its book value and the Trademarks are considered worthless. What is the amount of goodwill at the date of purchase?
-$1,009,500
$1,085,500
$424,500
$565,500
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