On June 1, Cline Co. paid $800,000 cash for all of the issued and outstanding common...
On June 1, Cline Co. paid $800,000 cash for all of the issued and outstanding common stock of Renn Corp. The carrying amounts for Renn’s assets and liabilities on June 1 follow:
| Cash | $ | 150,000 | |
| Accounts receivable | 180,000 | ||
| Capitalized software costs | 320,000 | ||
| Goodwill | 100,000 | ||
| Liabilities | (130,000 | ) | |
| Net assets | $ | 620,000 | |
On June 1, Renn’s accounts receivable had a fair value of $140,000. Additionally, Renn’s in-process research and development was estimated to have a fair value of $200,000. All other items were stated at their fair values. On Cline’s June 1 consolidated balance sheet, how much is reported for goodwill?
Homework Answers
| Consideration amount | $800,000 | |
| Fair value: | ||
| Cash | $150,000 | |
| Accounts receivable | $140,000 | |
| Capitalized software cost | $320,000 | |
| Software Research And development asset | $200,000 | |
| Liabilities | ($130,000) | |
| Net Assets acquired at fair value | $680,000 | |
| Goodwill ($800,000 - $680,000) | $120,000 |
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