Fruit King Company purchased 100% of the outstanding common shares of Berries,Inc.,for $23,750 on January 1,2X13.Berries Inc.'s balance sheet just before the acquisition was as follows:
$\begin{array}{ll}
\text { Cash } & \$ 4,500 \
\text { Net fixed assets } & \underline{12,000} \
\text { Total Assets } & \$ 16,500
\end{array}$
Liabilities$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $ $ 11,000
Stockholders' equity$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $5,500
Total Liabilities &
$\quad$Stockholders' Equity$ \quad $ $ \quad $ $ \quad $ $ \quad $ $ \quad $ $ \quad $ $ \$ 16.500 $
The fair market value of Berries Inc.'s assets and liabilities were equal to their book value.On January 1,2X13,compute the amount of goodwill (if any)Fruit King Company would recognize on this purchase.Where would this goodwill appear on Fruit King Company's financial statements?

Question

Fruit King Company purchased 100% of the outstanding common shares of Berries,Inc.,for $23,750 on January 1,2X13.Berries Inc.'s balance sheet just before the acquisition was as follows:
 $\begin{array}{ll}
\text { Cash } & \$ 4,500 \
\text { Net fixed assets } & \underline{12,000} \
\text { Total Assets } & \$ 16,500
\end{array}$ 
Liabilities$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $  $ 11,000
Stockholders' equity$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $5,500 
Total Liabilities &
$\quad$Stockholders' Equity$ \quad $ $ \quad $ $ \quad $ $ \quad $ $ \quad $ $ \quad $ $ \$ 16.500 $ 
The fair market value of Berries Inc.'s assets and liabilities were equal to their book value.On January 1,2X13,compute the amount of goodwill (if any)Fruit King Company would recognize on this purchase.Where would this goodwill appear on Fruit King Company's financial statements?

Quizplus · Accepted Answer

The Answer of Fruit King Company purchased 100% of the outstanding common shares of Berries,Inc.,for $23,750 on January 1,2X13.Berries Inc.'s balance sheet just before the acquisition was as follows:
 $\begin{array}{ll}
\text { Cash } & \$ 4,500 \
\text { Net fixed assets } & \underline{12,000} \
\text { Total Assets } & \$ 16,500
\end{array}$ 
Liabilities$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $  $ 11,000
Stockholders' equity$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $5,500 
Total Liabilities &
$\quad$Stockholders' Equity$ \quad $ $ \quad $ $ \quad $ $ \quad $ $ \quad $ $ \quad $ $ \$ 16.500 $ 
The fair market value of Berries Inc.'s assets and liabilities were equal to their book value.On January 1,2X13,compute the amount of goodwill (if any)Fruit King Company would recognize on this purchase.Where would this goodwill appear on Fruit King Company's financial statements?