On January 1, 2014, Red Company purchased Patriot Shop for $400,000 cash in a merger transaction. Red Company received the assets listed below and assumed accounts payable owed by Patriot to its suppliers in the amount of $30,000. $\begin{array}{lrr}&\text { Book Value per }&\text { Fair }\&\text { Patriot's Books }&\text { value }\
\text { Inventory } & \$ 300,000 & \$ 280,000 \
\text { Furniture and fixtures } & 60,000 & 73,000 \
\text { Other assets } & 10,000 & 32,000
\end{array}$ What amount of goodwill will be recorded in the transaction?

Question

Quizplus · Accepted Answer

The Answer of On January 1, 2014, Red Company purchased Patriot Shop for $400,000 cash in a merger transaction. Red Company received the assets listed below and assumed accounts payable owed by Patriot to its suppliers in the amount of $30,000. $\begin{array}{lrr}&\text { Book Value per }&\text { Fair }\&\text { Patriot's Books }&\text { value }\
\text { Inventory } & \$ 300,000 & \$ 280,000 \
\text { Furniture and fixtures } & 60,000 & 73,000 \
\text { Other assets } & 10,000 & 32,000
\end{array}$ What amount of goodwill will be recorded in the transaction?

On January 1, 2014, Red Company Purchased Patriot Shop for $400,000