Gulf Company purchases Arab Company for $900,000 cash on January 2, 2019. The book value of Arab Company's net assets, as reflected on its December 31, 2018 balance sheet is $720,000. An analysis by Gulf on December 31, 2018 indicates that the fair value of Arab’s tangible assets exceed the book value by $60,000, and the fair value of indefinite intangible assets exceed book value by $55,000. How much goodwill should recognized by Gulf company when recording the purchase of Arab Company? a. $98,000. b. $130,000. c. $-0-. d. $65,000.

Gulf Company purchases Arab Company for $900,000 cash on January 2, 2019. The book value of Arab Company's net assets, as reflected on its December 31, 2018 balance sheet is $720,000. An analysis by Gulf on December 31, 2018 indicates that the fair value of Arab’s tangible assets exceed the book value by $60,000, and the fair value of indefinite intangible assets exceed book value by $55,000. How much goodwill should recognized by Gulf company when recording the purchase of Arab Company? a. $98,000. b. $130,000. c. $-0-. d. $65,000.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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Question

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Gulf Company purchases Arab Company for $900,000 cash on January 2, 2019. The book value of
Arab Company’s net assets, as reflected on its December 31, 2018 balance sheet is $720,000. An
analysis by Gulf on December 31, 2018 indicates that the fair value of Arab's tangible assets exceed
the book value by $60,000, and the fair value of indefinite intangible assets exceed book value by
$55,000. How much goodwill should recognized by Gulf company when recording the purchase of
Arab Company?
a. $98,000.
b. $130,000.
c. $-0-.
d. $65,000.

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