1. Pat Corporation paid $100,000 cash for the net assets of Sag Company, which consisted of the following:
| Book Value | Fair Value |
Current assets | $ 40,000 | $ 56,000 |
Plant and equipment | 160,000 | 220,000 |
Liabilities assumed | (40,000) | (36,000) |
| $160,000 | $240,000 |
Assume Sag Company is dissolved. The plant and equipment acquired in this business combination should be recorded at:
a $220,000
b $200,000
c $183,332
d $180,000
2. On April 1, Par Company paid $1,600,000 for all the issued and outstanding common stock of Son Corporation in a transaction properly accounted for as an acquisition. Son Corporation is dissolved. The recorded assets and liabilities of Son Corporation on April 1 follow:
Cash | $160,000 |
Inventory | 480,000 |
Property and equipment (net of accumulated depreciation of $640,000) | 960,000 |
Liabilities | (360,000) |
On April 1, it was determined that the inventory of Son had a fair value of $380,000, and the property and equipment (net) had a fair value of $1,120,000. What is the amount of goodwill resulting from the acquisition?
a 0
b $100,000
c $300,000
d $360,000
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