The following balance sheets were reported on January 1, 2014, for Peach Company and Stream Company: Peach StreamCash $103,800 $19,410Inventory 303,700 98,100Equipment (net) 946,730 416,580Total $1,354,230 534,090 Total Liabilities $321,800 $104,000Common stock, $20 par value 406,600 190,300Other contributed capital 269,700 71,160Retained earnings 356,130 168,630Total $1,354,230 $534,090Appraisals reveal that the inventory has a fair value of $124,020, and the equipment has a current value of $453,380. The book value and fair value of liabilities are the same. Assuming that Peach Company wishes to acquire Stream for cash in an asset acquisition, determine the following cutoff amounts: (a)The purchase price above which Peach would record goodwill.Purchase price $

Goodwill = Purchase consideration paid - fair value of net assets acquired So Goodwill need to be…

Answered: The following balance sheets were…

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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The following balance sheets were reported on January 1, 2014, for Peach Company and Stream Company:

	*Peach*	*Stream*
Cash	$103,800	$19,410
Inventory	303,700	98,100
Equipment (net)	946,730	416,580
Total	$1,354,230	534,090

Total Liabilities	$321,800	$104,000
Common stock, $20 par value	406,600	190,300
Other contributed capital	269,700	71,160
Retained earnings	356,130	168,630
Total	$1,354,230	$534,090

Appraisals reveal that the inventory has a fair value of $124,020, and the equipment has a current value of $453,380. The book value and fair value of liabilities are the same. Assuming that Peach Company wishes to acquire Stream for cash in an asset acquisition, determine the following cutoff amounts:

(a)

The purchase price above which Peach would record goodwill.

Purchase price

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