History Bookmarks Window Help canvashighlineedu D Question 1

History Bookmarks Window Help canvas.highline.edu D Question 14 2 pts Eastern Star purchased the entire business of South Park for $1850, 000. the following was revealed in the accounting records book value FMV 600K 1.3M cash AR inventory 500K Other assets 250K AP Other liabilities 200K What is goodwill 600K 1.3M 770K 325K 1.1M 1.1M 200K O 115000 O 155000 none of the above 12

Solution

Please follow the given working as to how arrive at the answer figure:

Cash

AR

Inventory

Total Assets

Working		FMV
	Cash	$                           600,000.00
	AR	$                       1,300,000.00
	Inventory	$                           770,000.00
	Other Assets	$                           325,000.00
A	Total Assets	$                       2,995,000.00
	AP	$                       1,100,000.00
	Other Liabilities	$                           200,000.00
B	Total Liabilities	$                       1,300,000.00
C = A - B	Amount payable	$                       1,695,000.00
D	Amount actually paid	$                       1,850,000.00
E = D - C	Goodwill	$                           155,000.00
Answer	Option #2: # 155,000