Question
On November 12, 2021, Red Corp. purchased Blue Inc. for $600,000. Blues balance sheet on that date is as follows: Assets: Liabilities: Cash $ 10,000
On November 12, 2021, Red Corp. purchased Blue Inc. for $600,000. Blues balance sheet on that date is as follows:
Assets: |
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| Liabilities: |
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Cash | $ 10,000 |
| Accounts Payable | $ 30,000 | ||
Accounts Receivable (net) | 60,000 |
| Notes Payable | 90,000 | ||
PP&E (net) | 300,000 |
| Pension Liability | 100,000 | ||
Patent | 50,000 |
| Total Liabilities | 220,000 | ||
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| Owners Equity: |
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| Common Stock | 40,000 | ||
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| Retained Earnings | 160,000 | ||
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| Total Stockholders Equity | 200,000 | ||
| _______ |
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| _______ | ||
Total Assets | $420,000 |
| Total Liabilities & Stockholders Equity | $420,000 | ||
Red Corp. has determined the following for Blue Inc.:
- The net realizable value of its accounts receivable is $45,000
- The fair value of its PP&E is $400,000
- The pension liability is understated by $25,000
- An unrecorded customer list Blue owns is worth $10,000
- For all other amounts, the book value on 11/12/21 equals their fair value
Question: How much goodwill, if any, should Red Corp. record on 11/12/21 related to this purchase?
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