Question 1 Part A and B

A. Juliana Corporation purchased all of the outstanding stock of Caldwell Inc., paying $4,300,000 cash. Juliana assumed all of the liabilities of Caldwell. Book values and fair values of acquired assets and liabilities were:

	Book Value				Fair Value
Current assets (net)	$	340,000			$	620,000
Property, plant, & equip. (net)		1,690,000				2,200,000
Liabilities		480,000				790,000

Juliana would record goodwill of:

Multiple Choice

• $ 2,270,000.

• $ 310,000.

• $ 7,130,000.

• $ 2,690,000.

B. Alamos Co. exchanged equipment and $17,400 cash for similar equipment. The book value and the fair value of the old equipment were $81,300 and $90,400, respectively. Assuming that the exchange lacks commercial substance, Alamos would record a gain/(loss) of:

Multiple Choice

• $(9,100).

• $ 0.

• $ 9,100.

• $26,500.