Question 16

On July 1, Seth Inc., a calendar year corporation, purchased a business for a $1.4 million lump-sum price. The business' balance sheet assets had the following appraised FMV.

Accounts receivable	$38,900
Inventory	650,000
Equipment	511,100

What is the tax basis of the goodwill acquired by Sessi Inc. on the purchase of this business and what is the goodwill amortization deduction for the year of purchase?Group of answer choices

Goodwill is $200,000; Goodwill amortization is $6,667

Goodwill is $200,000; Goodwill amortization is $13,333

Goodwill is $200,000; Goodwill amortization is $5,555

Goodwill is $1,200,000; Goodwill amortization is $40,000