Chapter 2, Problem 12P

On June 1, Cline Co. paid $800,000 cash for all of the issued and outstanding common stock of Renn Corp. The carrying amounts for Renn’s assets and liabilities on June 1 follow:

Cash	$150,000
Accounts receivable	180,000
Capitalized software costs	320,000
Goodwill	100,000
Liabilities	(130,000)
Net assets	$620,000

  On June 1, Renn’s accounts receivable had a fair value of $140,000. Additionally, Renn’s in-process research and development was estimated to have a fair value of $200,000. All other items were stated at their fair values. On Cline’s June 1 consolidated balance sheet, how much is reported for goodwill?

1. a. $320,000
2. b. $120,000
3. c. $80,000
4. d. $20,000