Multiplex purchased 100 percent of the outstanding common stock of Lipley Company for $900,000. At the time of the acquisition, the fair market values of Lipley’s individual assets and liabilities follow. Cash $ 90,000 Accounts receivable 60,000 Inventory 160,000 Plant and equipment 560,000 Payables 300,000 REQUIRED:

a. Provide the journal entry recorded by Multiplex at the time of the acquisition.

b. Assume that Multiplex amortizes goodwill over a forty-year period using the straight-line method. Compute the dollar amount of goodwill that was amortized during the year fol¬ lowing the acquisition.

c. Assume that the book values of the assets and liabilities on Lipley’s balance sheet as of the date of the acquisition were $550,000 and $300,000, respectively. Explain how the net book value of Lipley could be less than the net FMV of Lipley’s assets and liabilities, which in turn is less than the price Multiplex paid for Lipley’s common stock.