ADVANCED ACCOUNT CONNECT +PROCTORIO
ADVANCED ACCOUNT CONNECT +PROCTORIO
14th Edition
ISBN: 9781266179082
Author: Hoyle
Publisher: MCG
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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
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