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On July 1, TruData Company issues 9,600 shares of its common stock with a $5 par value and a $45 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) | $ | (246,400 | ) | $ | (140,000 | ) | |||||
| Expenses (1/1 to 7/1) | 150,000 | 84,000 | |||||||||
| Retained earnings, 1/1 | (122,000 | ) | (140,000 | ) | |||||||
| Cash and receivables | 176,000 | 52,000 | $ | 52,000 | |||||||
| Inventory | 176,000 | 146,000 | 176,000 | ||||||||
| Patented technology (net) | 246,000 | 178,000 | 216,000 | ||||||||
| Land | 390,000 | 214,000 | 240,000 | ||||||||
| Buildings and equipment (net) | 90,000 | 72,000 | 72,000 | ||||||||
| Liabilities | (534,000 | ) | (366,000 | ) | (344,000 | ) | |||||
| Common stock | (314,000 | ) | (64,000 | ) | |||||||
| Additional paid-in capital | (11,600 | ) | (36,000 | ) | |||||||
| On its acquisition-date consolidated balance sheet, what amount should TruData report as goodwill? | |||||||||||
Expert Answer
Computation of amount of goodwill
Fair value $432000
Book value of Webstat ($296000)
Fair value in excess of book value $136000
Identified with specific accounts:
Inventory $30000
Patented technology $38000
Land $26000
Liabilities $22000
Good will $20000.
