Question

On july 1, trudata company issues 10,000 shares of its common stock with a $5 par value and a $40 fair value in exchange for all of webstat company's outstanding voting shares. Webstat's precombination book and fair values are shown below along with book values for trudata's accounts. Trudata webstat webstat book values book values fair values revenues (1/1 to 7/1) $ (250,000 ) $ (130,000 ) expenses (1/1 to 7/1) 170,000 80,000 retained earnings, 1/1 (130,000 ) (150,000 ) cash and receivables 140,000 60,000 $ 60,000 inventory 190,000 145,000 175,000 patented technology (net) 230,000 180,000 200,000 land 400,000 200,000 225,000 buildings and equipment (net) 100,000 75,000 75,000 liabilities (540,000 ) (360,000 ) (350,000 ) common stock (300,000 ) (70,000 ) additional paid-in capital (10,000 ) (30,000 ) on its acquisition-date consolidated balance sheet, what amount should trudata report as goodwill

Answer 1

$15,000

Step-by-step explanation:

Calculation for the amount that should be report as goodwill

Fair Market Value of common stock issued for acquisition $400,000

(10,000 shares×$40 fair value)

Less Fair Market Value of Net Assets of Web $385,000

(ASSETS: Cash and receivables $60,000+ Inventory $175,000 +Patented technology (net) $200,000+ Land $225,000+Buildings and equipment (net)$ 75,000 - LIABILITIES $350,000)

GOODWILL $15,000

($400,000-$385,000)

Therefore the amount that should be report as goodwill will be $15,000