The Rogers Company purchased the Romer Company in January of 2014. Romer's balance sheet included $100,000 of assets, $25,000 of liabilities and equity of $75,000. Rogers agreed to assume the liabilities and to pay Romer $110,000 in cash. An independent appraiser assessed the fair market value of Romer's assets to be $115,000. Indicate whether each of the following statements about this transaction is true or false.
1. Rogers should record Romer's liabilities in the amount of $25,000
2. In recording the acquisition of Romer, Rogers will recognize $20,000 of goodwill
3. The goodwill recorded by Rogers will be amortized in the same manner as patents
4. Goodwill is considered to have an indefinite useful life
5. Rogers should record Romer's assets at their book value of $100,000

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The Answer of The Rogers Company purchased the Romer Company in January of 2014. Romer's balance sheet included $100,000 of assets, $25,000 of liabilities and equity of $75,000. Rogers agreed to assume the liabilities and to pay Romer $110,000 in cash. An independent appraiser assessed the fair market value of Romer's assets to be $115,000. Indicate whether each of the following statements about this transaction is true or false.
1. Rogers should record Romer's liabilities in the amount of $25,000
2. In recording the acquisition of Romer, Rogers will recognize $20,000 of goodwill
3. The goodwill recorded by Rogers will be amortized in the same manner as patents
4. Goodwill is considered to have an indefinite useful life
5. Rogers should record Romer's assets at their book value of $100,000

The Rogers Company Purchased the Romer Company in January of 2014