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1. On January 1, Year, 1, RAK, Inc. acquired a 25% interest rate in Tech Corp. for 375,000. At the date of acquisition, the net assets had a fair value in excess of shareholders’ equity of 200,000. The fair value in excess of book value is the result of equipment with a remaining useful life of four years. For the year ended December 31, Year 1, Tech had net income of 60,000 and RAK received a dividend of 10,000 from Tech. At December 31, Year 1, Tech had shareholders’ equity of 820,000. What is the amount of goodwill associated with RAK’s purchase of Tech?

a. 175,000

b. 170,000

c. 125,000

d. 93,750

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