X Company acquires all of Y Company's assets and liabilities for $15,000,000 in cash. The fair...
X Company acquires all of Y Company's assets and liabilities for $15,000,000 in cash. The fair values of Y's assets and liabilities approximate their book values, except Y has developed technology valued at $8,000,000 that is not reported on its balance sheet, and its buildings are overvalued by $7,000,000. Here is Y's balance sheet just prior to the acquisition:
|
Y Company |
|
|
Current assets |
$ 500,000 |
|
Land, buildings, and equipment |
9,500,000 |
|
Total assets |
$10,000,000 |
|
Liabilities |
$ 6,000,000 |
|
Common stock, $1 par |
100,000 |
|
Additional paid-in capital |
2,915,000 |
|
Retained earnings |
1,000,000 |
|
Treasury stock |
(20,000) |
|
Accumulated other comprehensive income |
5,000 |
|
Total liabilities and equity |
$10,000,000 |
How much goodwill is recognized for this acquisition?
A. $12,000,000
B. $ 4,000,000
C. $10,000,000
D. $16,000,000
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X Company acquires all of Y Company's assets and liabilities for
$15,000,000 in cash. The fair...
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