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Required information Skip to question On January 1, 20X6, Pumpkin Corporation acquired 70 percent of Spice Companys common stock for $210,000 cash. The fair value

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On January 1, 20X6, Pumpkin Corporation acquired 70 percent of Spice Companys common stock for $210,000 cash. The fair value of the noncontrolling interest at that date was determined to be $90,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:

Pumpkin Spice
Cash $ 50,000 $ 15,000
Accounts Receivable 70,000 25,000
Inventory 30,000 20,000
Land 150,000 80,000
Buildings and Equipment 250,000 200,000
Less: Accumulated Depreciation (70,000 ) (20,000 )
Investment in Spice Co. 210,000
Total Assets $ 690,000 $ 320,000
Accounts Payable $ 40,000 $ 10,000
Bonds Payable 150,000 40,000
Common Stock 300,000 90,000
Retained Earnings 200,000 180,000
Total Liabilities and Equity $ 690,000 $ 320,000

At the date of the business combination, the book values of Spices assets and liabilities approximated fair value except for inventory, which had a fair value of $30,000, and land, which had a fair value of $95,000.

Based on the preceding information, what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?

Multiple Choice

  • $0

  • $5,000

  • $25,000

  • $30,000

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