The following balance sheets were reported on January 1, 2016, for Wood Company and Rose Company:...

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The following balance sheets were reported on January 1, 2016, for Wood Company and Rose Company: Cash Inventory Equipment (n

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Answer 1

Answer #1

1. Purchase price above which Wood would record goodwill= Total assets at Fair value-Total liabilities

Total assets= Cash+Inventory+equipment= 30000+180000+615000= 825000
Total liabilities= 150000
Price above which goodwill can be recorded= 825000-150000= $675000

2. Purchase price at $50000 gain

Total assets-Total liabilities-gain= 825000-150000-50000= $625000

3. The purchase price below which wood would record a bargain is same as 1 which is $675000

4. Purchase price at $75000 goodwill= Total assets+goodwill-total liabilities= 825000+75000-150000= $750000

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Answer 2

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