On January 4, David Company acquired all of the net assets (assets and liabilities) of William Company for $134,000 cash. The two companies merged, with David Company surviving. On the date of acquisition, William's balance sheet included the following. Balance Sheet at January 4 Cash Property and equipment (net) Total assets Liabilities Common stock (par $5) Retained earnings Total liabilities and stockholders' equity The property and equipment had a fair value of $55,000. William also owned an internally developed patent with a fair value of $5,000 (thus, not recorded as an asset on William's balance sheet). The book values of the cash and liabilities were equal to their fair values. Required: 1. How much goodwill was involved in this merger? William Company $40,000 70,000 $110,000 $12,000 22,000 76,000 $110,000 Goodwill

On January 4, David Company acquired all of the net assets (assets and liabilities) of William Company for $134,000 cash. The two companies merged, with David Company surviving. On the date of acquisition, William's balance sheet included the following. Balance Sheet at January 4 Cash Property and equipment (net) Total assets Liabilities Common stock (par $5) Retained earnings Total liabilities and stockholders' equity The property and equipment had a fair value of $55,000. William also owned an internally developed patent with a fair value of $5,000 (thus, not recorded as an asset on William's balance sheet). The book values of the cash and liabilities were equal to their fair values. Required: 1. How much goodwill was involved in this merger? William Company $40,000 70,000 $110,000 $12,000 22,000 76,000 $110,000 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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