Question & Answer: The following information applies to the questions displayed below.]…..

The following information applies to the questions displayed below.]

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.

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Question & Answer: The following information applies to the questions displayed below.]…..
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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.

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