Elizabeth Pie Company has been in business for 50 years and has developed a large group of loyal restaurant customers. Giant Bakery Inc. has made an offer to buy Elizabeth Pie Company for $4,200,000. The book value of Elizabeth Pie's recorded assets and liabilities on the date of the offer is $3,300,000 with a fair value of $3,600,000. Elizabeth Pie also (1) holds a patent for a pie crust fluting machine that the company invented (the patent with a fair value of $365,000 was never recorded by Elizabeth Pie because it was developed internally) and (2) estimates goodwill from loyal customers to be $340,000 (also never recorded by the company). If Elizabeth Pie Company management accepts Giant Bakery's offer of $4,200,000, compute the amount of goodwill that Giant Bakery should record on the date of the purchase. Goodwill

Elizabeth Pie Company has been in business for 50 years and has developed a large group of loyal restaurant customers. Giant Bakery Inc. has made an offer to buy Elizabeth Pie Company for $4,200,000. The book value of Elizabeth Pie's recorded assets and liabilities on the date of the offer is $3,300,000 with a fair value of $3,600,000. Elizabeth Pie also (1) holds a patent for a pie crust fluting machine that the company invented (the patent with a fair value of $365,000 was never recorded by Elizabeth Pie because it was developed internally) and (2) estimates goodwill from loyal customers to be $340,000 (also never recorded by the company). If Elizabeth Pie Company management accepts Giant Bakery's offer of $4,200,000, compute the amount of goodwill that Giant Bakery should record on the date of the purchase. Goodwill

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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