Figure:
Perry Company acquires 100% of the stock of Hurley Corporation on January 1, 2010, for $3,800 cash. As of that date Hurley has the following trial balance; Any excess of consideration transferred over fair value of net assets acquired is considered goodwill with an indefinite life. FIFO inventory valuation method is used.
-Compute goodwill, if any, at January 1, 2010.
A) $150.
B) $250.
C) $700.
D) $1,200.
E) $550.

Question

Figure:
Perry Company acquires 100% of the stock of Hurley Corporation on January 1, 2010, for $3,800 cash. As of that date Hurley has the following trial balance;  Any excess of consideration transferred over fair value of net assets acquired is considered goodwill with an indefinite life. FIFO inventory valuation method is used.
-Compute goodwill, if any, at January 1, 2010.
A) $150. 
B) $250. 
C) $700. 
D) $1,200. 
E) $550.

Quizplus · Accepted Answer

Goodwill = Excess of purchase price over book value of net assets = $1,000 - $850 = $150.

Figure: Perry Company Acquires 100% of the Stock of Hurley Corporation