On March 12, 2008, Shoreham, Inc. acquired melting equipment for $45,600. The estimated life of the equipment is 6 years, with an estimated residual value of $2,400.
Cage Corporation purchases Presley Company’s entire business for $2,700,000. The fair market value of Presley’s net identifiable assets is $2,400,000.
a Presley should record goodwill of $300,000.
b Cage paid $300,000 for goodwill generated by Presley.
c Cage should charge the $300,000 excess paid for Presley Company directly to expense.
d Presley should record amortization over a period not to exceed 40 years.
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