The Acquisition Method
Problems 11 and 12 are based on the following information:
Hill, Inc., obtains control over Loring, Inc., on July 1. The book value and fair value of Loring’s accounts on that date (prior to creating the combination) follow, along with the book value of Hill’s accounts:
Assume that Hill issues 10,000 shares of common stock with a $5 par value and a $40 fair value to obtain all of Loring’s outstanding stock. How much goodwill should be recognized?
a. –0–.
b. $15,000.
c. $35,000.
d. $100,000.
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