Tilman Company paid $360,000 to acquire the net assets of Wilver Company. If the business combination is treated as an acquisition and the fair value of Wilver Company's current assets is $135,000, its plant and equipment is $363,000, and its liabilities are $84,000, Tilman Company's financial statements immediately after the combination will include which additional item due to the acquisition of Wilver Company:
A)Negative goodwill of $54,000.
B)Plant and equipment of $498,000.
C)Plant and equipment of $414,000.
D)A gain of $54,000.

Question

Quizplus · Accepted Answer

The fair value of Wilver Company's net assets is $414,000 ($135,000 + $363,000 - $84,000). Since Tilman Company paid only $360,000, there is a gain of $54,000 ($414,000 - $360,000) recognized in the financial statements.

Tilman Company Paid $360,000 to Acquire the Net Assets of Wilver